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 Nonfarm payrolls probably increased by 190,000 jobs last month in
the U.S. Labor Department's report due on Friday, with the
unemployment rate holding at an eight-year low of 4.9 percent,
according to a Reuters survey of economists.
The labor market gained 151,000 jobs in January, after the warmest
temperatures in years boosted hiring in weather-sensitive sectors
like construction, helping payrolls to rise by an average 279,000
jobs per month in the fourth quarter last year.
"The employment data should reinforce that the recession debate is
premature and overdone, and could strengthen the case for the Fed
not waiting too long," said Ryan Sweet, senior economist at Moody's
Analytics in Westchester, Pennsylvania.
Fears of a recession in the wake of poor economic reports in
December and slowing growth in China sparked a global stock market
rout at the start of the year, causing financial market conditions
to tighten.
Financial markets have priced out bets of an interest rate rise at
the Fed's March 15-16 policy meeting and the probabilities for rate
increases for the rest of the year remain rather small.
Significant data such as consumer and business spending improved
strongly in January though, leading to predictions that economic
growth in the first quarter could rise by at least a 2.5 percent at
an annualized rate. The economy grew at a 1.0 percent pace in the
fourth quarter of 2105.
Economists say the improved growth outlook, together with signs of
inflation creeping up, could prompt the U.S. central bank to lift
borrowing costs in June. The Fed raised its key overnight interest
rate in December for the first time in nearly a decade.
SLOWER WAGE GROWTH
There is a risk, however, that payroll gains could come in below
expectations after a survey on Thursday showed employment in the
services sector fell in February for the first time in two years.
Still, economists say any below-forecast number should not be
interpreted as a sign of labor market weakness as companies are
struggling to find qualified workers to fill open positions.
"Despite the weaker services survey, we still expect solid payroll
gains in February. However, we should not be too surprised about a
slowdown as the labor market approaches full employment," said chief
U.S. economist at UniCredit Research in New York.
Fed Chair Janet Yellen has said the economy needs to create just
under 100,000 jobs a month to keep up with growth in the working age
population. The labor force participation rate, or the share of
working-age Americans who are employed or at least looking for a
job, is near four-decade lows.
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While wage growth is expected to have moderated in February,
economist say it would be largely payback for January's jump, which
was driven by a calendar quirk. Wage growth is seen accelerating as
the labor market settles into full employment.
Average hourly earnings are forecast increasing 0.2 percent after
surging 0.5 percent in January.
In February, employment gains were likely concentrated in the
services sector, with mining probably losing more jobs and
manufacturing reversing some of January's surprise increase. Mining
payrolls have declined by 146,000 jobs since peaking in September
2014, with three-quarters of the losses in support activities. More
losses are likely after oilfield services provider Halliburton Co <HAL.N>
said last month it would cut a further 5,000 jobs because of a
prolonged slump in oil prices.
A rebound is expected in private education jobs after a record
39,000 plunge in January.
"There are large seasonal swings in that component caused by winter
holidays at private universities that probably weren't adjusted for
properly in January. There weren't actually mass firings of college
professors that we're aware of," said Ted Wieseman, an economist at
Morgan Stanley in New York.
A further moderation is expected in construction employment after
the hefty weather-driven gains in the fourth quarter.
(Reporting by Lucia Mutikani; editing by Clive McKeef)
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