U.S. Employers Probably Increased the Pace of Hiring in March

By Joe Richter
Bloomberg

April 6, 2007

Employers in the U.S. probably picked up the pace of hiring last month, giving the economy a spark as it struggles to overcome slumps in housing and manufacturing.

An additional 130,000 workers found jobs in March, following a 97,000 gain in payrolls a month earlier, based on the median estimate of economists surveyed by Bloomberg News before a Labor Department report today. The jobless rate is forecast to rise to 4.6 percent, still close to a five-year low.

New jobs and bigger paychecks are giving more Americans the means to spend, preventing the housing recession from spreading to the rest of the economy. The report may hearten Federal Reserve Chairman Ben S. Bernanke, who last week stood by his forecast for "moderate'' growth even after acknowledging risks were multiplying.

"There have been some miserable reports on housing and manufacturing, but the labor market continues to provide jobs and income,'' said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. "The economy is going through a patch where consumer spending is the only engine that's moving.''

The extent of March's hiring rebound, in part, is also due to better weather, economists said. Construction payrolls are unlikely to match February's 62,000 drop that was probably caused by mid-month snowstorms in the Northeast and Midwest. The drop in construction jobs was the biggest in 15 years.

The Labor Department is due to issue the report at 8:30 a.m. in Washington. The payroll estimate is the median of 75 economists' forecasts, which ranged from gains of 70,000 to 240,000. An average 189,000 jobs a month were created in 2006.

Jobless Rate

Forecasts for the unemployment rate ranged from 4.5 percent to 4.7 percent. October's 4.4 percent rate was the lowest since May 2001. Because fewer people are entering the labor force than in years past, smaller payroll gains are needed each month to keep the unemployment rate stable, economists said.

Also today, the Commerce Department at 10 a.m. is projected to report that inventories at U.S. wholesalers rose 0.4 percent in February after a 0.7 percent gain the prior month, based on the median estimate of economists surveyed.

Wages per hour were projected to rise 0.3 percent last month on average, the jobs report may also show. The gain would mean hourly earnings rose 4 percent in the 12 months ended in March, putting wages ahead of inflation. Consumer prices rose 2.4 percent in the year ended in February.

"We continue to see modest growth and stability in the labor market,'' Steve Pogorzelski president of Monster International Worldwide, said in an interview on April 4. "Employers continue to report they're concerned about turnover, driven by opportunities to make more money'' in other jobs.

New Wage Data

With today's report, the Labor Department will introduce more comprehensive data on earnings to include all workers, not just the production and non-supervisory staff covered previously that reflected about 80 percent of the workforce. The data will include wages and non-recurring payments such as bonuses.

Other reports this week confirmed the labor market's resiliency, economists said.

ADP Employer Services said companies added 106,000 jobs last month after a 65,000 gain in February. The ADP data are based only on a count of private payrolls which exclude government workers. Government payrolls increased by an average 22,000 jobs a month in the 12 months ended in February.

A Conference Board survey released last week showed the share of Americans who said jobs are plentiful rose last month to the highest since August 2001. First-time claims for unemployment benefits are also suggesting companies are holding on to workers.

'Hard' Finding Workers

"It's hard to find enough people to grow the way we want,'' said John Milligan, chief operating officer of Foster City, California-based Gilead Sciences Inc., the world's second- biggest seller of HIV drugs behind GlaxoSmithKline Plc, in an interview last month.

Gains in employment at service industries will help offset projected job losses at manufacturers and builders, economists said. Factories may have cut 12,000 jobs last month, bringing the number of jobs lost the past six moths to 103,000, based on the median estimate in a Bloomberg survey of economists.

Milpitas, California-based Solectron Corp., the world's second-largest maker of electronics for other companies, said it may cut as many as 1,500 jobs as it consolidates facilities in North America and Europe.

Today's report will also probably show a drop of 30,000 housing-related jobs in March, according to a forecast by Lehman Brothers Holdings Inc.

"The continuing increases in employment, together with some pickup in real wages, have helped sustain consumer spending,'' Fed Chairman Bernanke said during Congressional testimony last week. "Growth in consumer spending should continue to support the economic expansion in coming quarters.''

Bernanke also said interest-rate policy is still aimed at combating inflation, which central bankers consider a bigger risk to the economy. Still, "uncertainties have risen, and therefore a little more flexibility might be desirable.''


                        Bloomberg Survey

   FIRM                     Nonfarm  Unemploy   Manu   Avg Hrly
                            Payroll    Rate   Payroll  Earnings
   ------------------------------------------------------------
   Number of replies           75       73       16       59
   MEDIAN                     130      4.6%     -12      0.3%
   AVERAGE                    134      4.6%     -12      0.3%
   High Forecast              240      4.7%      0       0.4%
   Low Forecast                70      4.5%     -20      0.2%
   Previous                    97      4.5%     -14      0.4%
   ------------------------------------------------------------
   4CAST Ltd.                 150      4.5%     n/a      0.3%
   Action Economics           150      4.5%     -15      0.3%
   AIG Global Invest.         114      4.6%     n/a      0.4%
   Alleti Gestielle SGR       110      4.6%     -12      n/a
   Allianz Dresdner            90      4.6%     n/a      0.3%
   Argus Research             110      4.5%     -15      0.3%
   BBVA                       135      4.6%     n/a      0.3%
   BMO Capital Markets        115      4.6%     n/a      0.3%
   BNP Paribas                 70      4.6%     n/a      0.3%
   B of A Securities          130      4.6%     n/a      0.3%
   Banca IMI                  110      4.6%     n/a      0.3%
   Bancolombia SA             160      n/a      n/a      n/a
   Banco Itau Europa          130      4.6%     n/a      n/a
   Bantleon Bank AG           100      4.6%     n/a      n/a
   Barclays Capital           165      4.5%     n/a      0.3%
   Bayerische Landes.         150      4.6%     n/a      0.3%
   Bear Stearns               150      4.5%     n/a      0.3%
   BOT- Mitsubishi            146      4.6%     -10      0.3%
   Briefing.com               150      4.6%     n/a      0.3%
   Calyon                      90      4.6%     n/a      0.3%
   CFC Group                  170      4.5%     n/a      0.4%
   CIBC World Markets         140      4.6%     n/a      0.3%
   Citigroup                  240      4.5%     n/a      0.4%
   ClearView Economics        100      4.7%     n/a      0.3%
   Commerzbank                130      4.6%      0       0.3%
   Countrywide SEC             85      4.6%     n/a      0.3%
   Credit Suisse              165      4.6%     n/a      0.3%
   Daiwa Securities           140      4.5%     n/a      n/a
   Danske Bank                140      4.5%     n/a      n/a
   DekaBank                   140      4.6%     n/a      0.2%
   Desjardins Group           100      4.6%     n/a      0.3%
   Deutsche Bank              120      4.6%     n/a      0.3%
   Deutsche PostBank          110      4.5%     n/a      n/a
   Dresdner Kleinwort         110      4.6%     -15      0.3%
   DZ Bank                    110      4.6%     n/a      0.3%
   Essen Hyp.                 130      4.6%     n/a      n/a
   FIMAT-Cube                 105      4.6%     n/a      0.2%
   First Trust Advisors       216      4.5%     -17      0.4%
   Fortis                     160      4.5%     n/a      n/a
   Global Insight             150      4.6%     n/a      0.3%
   Goldman Sachs              150      4.6%     n/a      0.3%
   H&R Block Financial        125      4.6%     -20      0.3%
   Horizon Investments        110      4.6%     n/a      0.2%
   HypoVereinsbank            130      4.6%     n/a      n/a
   IDEAglobal                 155      4.6%     -10      0.3%
   ING Barings                100      4.6%     n/a      0.3%
   Informa Global             115      4.6%     -10      0.3%
   Insight Economics          150      4.5%     n/a      0.3%
   J.P. Morgan Chase          170      4.5%     n/a      0.2%
   JPMorgan Private           100      4.6%     n/a      0.3%
   Lehman                     115      4.6%     n/a      0.3%
   Lloyds TSB                 150      4.6%     n/a      0.4%
   Maria Fiorini              140      4.6%     n/a      0.3%
   Merrill Lynch              180      4.5%     n/a      0.3%
   MFC Global Invest.         105      4.5%     -15      0.2%
   Mizuho Securities          100      4.6%     n/a      0.2%
   Moody's Economy.com        110      4.5%     n/a      0.3%
   Morgan Stanley             150      4.6%     n/a      0.4%
   National Bank Fin.          70      4.6%     n/a      0.3%
   National City Bank         227      4.5%     n/a      0.3%
   Nomura                     135      4.6%      -5      0.2%
   Nord/LB                    115      4.5%     n/a      n/a
   PNC Bank                   110      4.6%     -12      0.3%
   RBS Greenwich Cap.         175      4.6%     -10      0.3%
   Regions Financial          110      4.6%     -12      n/a
   Ried, Thunberg             180      4.6%     n/a      n/a
   Societe Generale           150      4.5%     n/a      0.2%
   Stone & McCarthy           100      4.6%     -10      0.3%
   TD Securities              120      n/a      n/a      n/a
   Thomson/IFR                165      4.5%     n/a      0.3%
   Unigest                    110      4.5%     n/a      0.3%
   Univ. of MD                115      4.6%     n/a      n/a
   Wachovia                   160      4.5%     n/a      0.3%
   WestLB AG                  150      4.5%     n/a      n/a
   Westpac Banking            200      4.6%     n/a      0.2%

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