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 Another indication of the weather's impact came in the Federal
Reserve's anecdotal Beige Book on Wednesday. The U.S. central bank
described the economy's expansion in recent weeks as "modest to
moderate," with bad weather causing a "slight" decline in activity
in two of 12 districts.
Economists were little fazed by the downbeat reports. They said the
economy's fundamentals were still sound, and that a string of mostly
weak data would not dissuade the Fed from continuing to dial back
its monetary stimulus.
"We continue to believe that the underlying momentum in the economy
remains favorable, and we look for the pace of growth to rebound
meaningfully in the coming months as the drag on activity from the
unseasonably cold weather abates," said Millan Mulraine, deputy
chief economist at TD Securities in New York.
A report from payrolls processor ADP showed private employment
increased by a tepid 139,000 jobs last month. At the same time,
private-sector jobs growth in January was revised down sharply to
127,000 from 175,000.
Moody's Analytics, joint developers of the report, blamed harsh
weather for last month's reading, which was below the 160,000 jobs
that economists had expected.
The report came ahead of the government's comprehensive employment
report on Friday and raised the prospect of a third straight month
of sub-par nonfarm payrolls gains in February, though economists
said the ADP data was not a good predictor.
A Reuters survey conducted last week forecast employers added
150,000 workers to their payrolls last month, up from the similarly
weather-depressed gains of 113,000 in January and 75,000 in
December.
In a separate report, the Institute for Supply Management said its
services sector index fell to 51.6 last month, the weakest reading
since February 2010, from 54 in January. It blamed bad weather for
the moderation in activity.
Still, February marked the 50th month in a row the index was above
50, the level that separates expansion and contraction.
A sub-index of services sector employment contracted for the first
time since December 2011 and recorded its worst reading in nearly
four years.
A separate report on the services sector from financial data firm
Markit also suggested activity slowed. In addition, Markit's gauge
of services sector employment fell to an 11-month low.
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FED SEEN STAYING THE COURSE
U.S. stocks were little changed after two days of sharp swings
related to events in Ukraine. The dollar slipped against a basket of
currencies, while prices for U.S. Treasury debt rose marginally.
The weather has complicated the Fed's task of determining the
economy's likely path. Still, officials from Fed Chair Janet Yellen
on down have shown little inclination to halt their plan to dial
back the central bank's monthly bond purchases.
Yellen told lawmakers last month that it would take a "significant
change" to the economy's prospects.
The Beige Book, which is based on reports from the Fed's business
contacts around the nation, mentioned the word "weather" 119 times,
while "snow" or a derivative of snow was used 24 times. The word
"ice" appeared twice.
This winter has been colder than usual, with severe snowstorms
affecting large parts of the Northeast, Midwest and Upper Midwest of
the country, while the Southeast has experienced unusual ice storms
in recent weeks as well.
"The Fed has already signaled that it will not jump to conclusions
about the pace of growth based on recent data," said John Ryding,
chief economist at RDQ Economics in New York.
"Unless Friday's jobs number is very weak, we expect the Fed will
announce a further reduction in the pace of purchases later in the
month."
The Fed's policy-setting committee meets on March 18-19.
(Reporting by Lucia Mutikani; additional
reporting by Rodrigo Campos, Ryan Vlastelica and David Gaffen in New
York; editing by Andrea Ricci, Tim Ahmann and Meredith Mazzilli)
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