US DATA PREVIEW: MARCH PAYROLLS SEEN +370K ON CENSUS WRKR LIFT
--Survey Period of 5 Weeks Could Boost Total as Well
WASHINGTON (MktNews) - Non-farm payrolls in the United States are
expected to rise by 370,000 in March following a modest 43,000 increase
in February, while average hourly earnings are seen increasing by 0.3%,
according to the medians in a Market News International survey of
economists' forecasts.
The swing factors for March are seen as the Census workers and the
Boeing strike, though the latter is expected to have only a modest
effect. In February, roughly 52,000 Census workers were hired compared
to between 175,000 and 200,000 in March, according to some estimates. In
addition, for only the second time in 50 years, there are five, rather
than four weeks in the February-March employment survey period.
The survey median for payrolls belied the wide range of forecasts
from +175,000 to +480,000.
As far as risks to the median forecast are concerned, payrolls have
been underestimated in four out of the past five months, while in March
historically, there have been four overestimations and two
underestimations in the past six years. However, three of the
overestimations have been in the previous three years.
Should payrolls come in as expected, that would put first-quarter
payrolls up 266,000 versus an average of 283,000 in the fourth quarter.
Selected verbatim comments:
MERRILL LYNCH - Stan Shipley, Mary Dennis
We expect March payrolls to jump 425,000 (consensus: 375,000),
boosted by two temporary factors. First 165,000 Census workers were
hired in March. Excluding them, we expect payrolls to rise 260,000.
Second, for only the second time in 50 years, there is a five-week
period between the February and March payroll surveys. With no history
to guide them, the Bureau of Labor Statistics made no special adjustment
for this fact. We assume that will add about 25.0% more workers to March
payrolls than the underlying job trend would otherwise indicate.
We estimate that the unemployment rate will fall to 4.0% in
March from 4.1% in February (consensus: 4.0%).
Average hourly earnings should climb 0.3% (consensus: 0.3%) in
March while the workweek is unchanged at 34.5 hours.
J.P. MORGAN - James F. O'Sullivan
Forecast: Nonfarm Payrolls -- 400,000; Unemployment Rate -- 4.0%
The forecast of up 400,000 for payrolls compares with a recent
trend of around 230,000. Along with a continued strong trend, the March
rise should have been boosted by a few special factors: five weeks
instead of four between samples (worth an estimated 50,000), and an end
to the Boeing strike (15,000 -- with the strikers to be reflected in
February retroactively), and temporary hiring for the 2000 census
(100,000).
While the BLS introduced a special adjustment for 5-week samples a
few years ago, the adjustment was not applied to March because of a lack
of history of 5-week Marches. The lack of history reflects the fact that
February is a short month. Since the sample is always taken in the week
(Sunday-Saturday) including the 12th, a 5-week sample is only possible
if 1) it is a leap year and 2) February 12th falls on a Saturday. Prior
to this year, there have only been two other occurrences since the
monthly payroll series started in 1939 -- in 1944 and 1972.
As noted, the forecast assumes a 100,000 boost from temporary
census hiring, although that is mainly a guess based on the pattern at
the time of the last census in 1990. In total, payrolls are likely to be
boosted by around 500,000 between January and May (even more than in
1990), with a reversal in following months.
MORGAN STANLEY DEAN WITTER - David Greenlaw
Forecast: Nonfarm Payrolls -- 325,000; Unemployment Rate -- 4.0%
During the March to May interval, the Census Bureau is expected to
hire 400,000 workers (representing about a 20.0% shortfall from their
original goal). We look for 75,000 census takers to show up in the March
labor market survey. Thus, our forecast for payrolls excluding the
census effect is +250,000. This is about in line with the average pace
of employment growth seen over the prior three months. Our forecast
reflects the recent performance of unemployment claims as well as the
fact that -- in the very short run -- favorable weather conditions can
help offset the impact of a shortage in labor supply.
And, Energy Dept. data show that conditions were unseasonably mild
across much of the nation during the period leading up the March survey
week.
Meanwhile, the unemployment rate is expected to return to its cycle
low of 4.0% this month, and the workweek should rebound to 34.6 hours.
Average hourly earnings are likely to post a slightly above trend gain
of 0.4%. Note that the census workers will receive wage rates ranging
from $8 to $18 per hour depending on location. This will provide a
small, temporary boost to personal income. But, the average hourly
earnings data contained in the monthly labor market report do not
include the government sector and thus will be unaffected.
NOMURA SECURITIES INTERNATIONAL - Carol Stone
Forecast: Nonfarm Payrolls -- 350,000; Unemployment Rate -- 4.0%
A sharp rebound in payrolls seems almost assured this month as many
industries with low or negative changes last month turn back positive,
especially construction and seasonal manufacturing, such as food
processing. The federal government added more Census workers. We assume
100,000; the high forecasts include more. More broadly, the declining
number of people receiving unemployment insurance suggests that job
growth should be firm and that the unemployment rate should ease to
4.0%, if not below. Finally, average hourly earnings are expected to
extend their recent trend rate, with a 0.3% monthly rise, producing a
3.5% yearly increase. |
