* Nonfarm jobs seen rising 203,000 in March
* Private sector payrolls seen gaining 218,000
* Unemployment rate expected to hold steady at 8.3 percent
* Strong employment report will reduce QE3 chances
By Lucia Mutikani
WASHINGTON, April 6 (Reuters) – U.S. payrolls likely rose by
more than 200,000 for the fourth straight month in March,
suggesting the economy is steadily healing and needs no extra
monetary policy support from the Federal Reserve for now.
That would mark the longest stretch of increases of more
than 200,000 per month in non-farm payrolls since 1999. The
unemployment rate is seen holding steady though at a three-year
low of 8.3 percent for a third month in a row.
Employers likely added 203,000 new jobs in March, according
to a Reuters consensus survey of economists, down a little from
227,000 in February when mild winter weather may have provided a
lift to seasonal hiring.
The U.S. Labor Department will release the March employment
report on Friday at 8:30 a.m. EST (1230 GMT).
“The economy is close to a self-sustaining expansion,” said
Gus Faucher, senior economist at PNC Financial Services in
Pittsburgh.
“It will take a few more months of good employment numbers
to confirm that the labor market is finally on its way to
persistently better job opportunities.”
A fourth successive month of healthy employment gains could
help President Barack Obama who faces re-election in November.
Even though job growth has been more than 200,000 per month
since December and the unemployment rate fallen from 9.1 percent
in August, it remains a little above the level when Obama took
office.
A big rise in payrolls could push the jobless rate up even
further though, or at least keep the rate above 8.0 percent
through the rest of this year, by luring unemployed Americans
who had given up the search for work back into the labor force.
The economy has lost about 5.3 million jobs since the start
of the 2007-09 recession. At the recent pace of growth, those
jobs will not be recouped before early 2014.
The painfully slow recovery in the labor market is a concern
for Federal Reserver Chairman Ben Bernanke who is keeping open
the option of further monetary policy support for the economy if
the unemploymnt rate remains stubbornly high.
But the minutes of the Fed’s March policy meeting released
this week showed policymakers seeing a broadening of the
economic recovery, leaving them slightly less inclined to launch
a third round of bond purchases, known as quantitative easing,
to spur growth.
“The key challenge will be determining whether the economic
recovery has generated sufficient momentum to obviate the need
for further monetary policy support,” said Millan Mulraine,
senior macro strategist at TD Securities in New York.
“With the economy continuing to build on the gains of the
last quarter the risks of more policy accommodation from the Fed
has diminished.”
LONG-TERM UNEMPLOYMENT A PROBLEM
The private sector is expected to have added 218,000 new
positions in March, while government layoffs likely continued
for a seventh straight month though at a slower pace.
Manufacturing likely enjoyed another month of strong job
gains, helped by carmakers trying to meet pent-up demand for
motor vehicles. Factory jobs increased by 83,000 in the first
two months of the year.
Construction hiring surprised by falling 13,000 in February
despite warm weathter and could see a rebound in March. Further
gains in mining are likely as exploration expands for inland
gas.
In the huge service sectors, gains are expected in
healthcare, professional and business services, as well as
temporary help categories, in line with recent trends.
The sturdy gains in manufacturing and professional and
business services employment should help to lift average hourly
earning by 0.2 percent and partially counter the notion that
most the new jobs being created pay low wages.
The workweek is seen steady at a 3-1/2 year high of 34.5
hours for a fourth straight month.
While the unemployment rate has dropped significantly,
long-term unemployment remains stubbornly high and 23.5 million
Americans are either out of work or underemployed.
As long as gross domestic product growth remains sluggish
employment growth is likely to remain moderate, keeping alive
the prospect for further Fed stimulative measures. GDP growth is
seen around 2.0 percent annualized in the first quarter 2012
down from 3.0 percent rate in the October-December period.
“The potential is still there for more quantitative easing,
but not in April,” said Bob Baur, chief global economist at
Principal Global Investors in Des Moines, Iowa.
“If the Fed sees growth slow and we see a down tick in the
jobs numbers, then I don’t think its unreasonable to expect the
Fed might do its quantitative easing in June.”
