US job growth seen accelerating from 17-month trough

WASHINGTON: US employment growth likely rebounded from a 17-month low in March as milder weather boosted activity in sectors like construction, which could further allay fears of a sharp slowdown in economic growth in the first quarter.

Worsening worker shortages and lingering effects of tighter financial market conditions at the turn of the year, however, suggest the job gains probably remained below 2018’s brisk pace.

The Labor Department’s closely watched monthly employment report on Friday would follow on the heels of fairly upbeat construction spending and factory data that led Wall Street banks to boost their growth estimates for the first quarter.

Nonfarm payrolls probably increased by 180,000 jobs last month, according to a Reuters survey of economists.

Investors will also be watching to see if February’s paltry 20,000 job count, the smallest since September 2017, is revised higher.

“A number that is close to consensus and with an upward revision to February will give you some degree of comfort that while the economy is slowing, it isn’t declining rapidly,” said Dan North, chief economist at Euler Hermes North America in Baltimore.

The economy has shifted into lower gear as stimulus from the Trump administration’s US$1.5 trillion tax cut package as well as increased government spending fades.

A trade war between Washington and Beijing, and slowing global growth have also taken a toll on the economy, which in July will celebrate 10 years of expansion, the longest on record. Growth forecasts for the first quarter are between a 1.4 per cent and 2.1 per cent annualized rate.

The economy grew at a 2.2 per cent rate in the fourth quarter, stepping down from the JulySeptember quarter’s brisk 3.4 per cent pace.

Fears of an abrupt economic slowdown could also be assuaged by strengthening wage growth and a low unemployment rate. Average hourly earnings are expected to have increased 0.3 per cent in March after jumping 0.4 per cent in February.

That would keep the annual increase in wages at 3.4 per cent, the biggest gain since April 2009.

Strong wage growth could boost confidence that consumer spending would accelerate and support the economy, after consumption stalled in January.

The scarcity of workers is driving up wages. The unemployment rate is forecast unchanged at 3.8 per cent in March, close to the 3.7 per cent that Federal Reserve officials project it will be by the end of the year. — Reuters