Strong jobs report could soothe market

Signs point toward a rebound that may allay slowdown fears

Friday’s jobs report could help calm still-jittery markets and affirm that the U.S. economy remains on solid footing, but it’s unlikely to persuade a wary Federal Reserve to raise interest rates in March, economists say.

Payroll processor ADP on Wednesday said businesses added 214,000 jobs in February in a possible sign the government on Friday will report a healthy rebound in employment growth that allays fears of a slowing economy. Economists polled by Bloomberg expect 195,000 job gains.

“I think psychologically and for markets, Friday’s report will be important,” Barclays economist Jesse Hurwitz says.

Of course, monthly payroll numbers are volatile, and economists are loath to put too much weight on a single report. This year, however, seemingly minor economic troubles overseas and in the oil industry have moved markets. The volatile markets, in turn, have dampened business confidence.

In January, employers added a disappointing 151,000 jobs. Many economists chalked that up to a natural slowdown after unseasonably warm weather helped employers add a blockbuster 279,000 jobs a month on average in the fourth quarter.

Still, the tepid growth raised concerns that manufacturing ’s troubles, which stem from the overseas and oil-patch distress, may be spreading to service firms.

Recently, economic reports have perked up and equity markets have rallied. But other market indicators, such as corporate borrowing costs, reflect lingering nervousness. Hurwitz says a strong payroll report Friday should further assuage investors.

Meanwhile, Fed policymakers recently have signaled the global troubles and market strains will likely keep them from raising a key rate in March after they lifted it in December for the first time in nearly a decade.

Even a strong jobs report — combined with the other positive economic news and a recent uptick in inflation toward the Fed’s annual 2% goal — likely won’t prod the Fed to reverse course, Jim O’Sullivan of High Frequency Economics says.

Credit markets, he says, are still showing some strains. And the Fed likely wants to avoid further jarring markets that are not expecting a March hike.