U.S. employment gains seen accelerating in February | Reuters - Firstpost
You are here:

U.S. employment gains seen accelerating in February | Reuters

#Argentina   #article   #Business   #Entertainment   #opinion   #Technology  


WASHINGTON U.S. employers likely stepped up hiring in February, in a sign of labor market strength that could further ease fears the economy is heading into recession and allow the Federal Reserve to gradually raise interest rates this year.

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.

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 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)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Mar 5, 2016 05:00 IST

Comment using Disqus

Show Comments