WASHINGTON -- The U.S. economy likely created jobs at the fastest pace in four months in March as it shifted into a higher gear after being held back by a brutally cold winter.
Employers are expected to have added 200,000 new jobs to their payrolls last month after adding 175,000 in February, according to a Reuters survey of economists. The jobless rate likely fell one-tenth of a percentage point, returning to the five-year low of 6.6 percent reached in January.
"It's looking like the economy is in the process of reaccelerating after a very severe winter," said Robert Dye, chief economist at Comerica (CMA) in Dallas.
The Labor Department will release its monthly jobs tally Friday at 8:30 a.m. Eastern time.
An abnormally cold and snowy winter slammed the economy at the end of 2013 and the beginning of this year. %VIRTUAL-article-sponsoredlinks%Growth was further undercut by efforts by businesses to trim bloated inventories, the expiration of benefits for the long-term unemployed and cuts to food stamps.
But data ranging from manufacturing and services sector activity to automobile sales have signaled strength in the economy as the first quarter ended.
Should March hiring meet expectations, it would take job growth back near the 204,000 monthly average that prevailed through the first 11 months of 2013, and leave the economy close to regaining the positions lost during the recession.
A quickened pace of hiring could lead investors to bring forward expectations for when the Federal Reserve will move overnight interest rates up from near zero. Currently, bets are centered around the middle of next year.
Fed Chair Janet Yellen has argued the central bank needs to maintain a highly accommodative monetary policy for some time to come to eliminate slack in the labor market.
She has pointed to an unusually large number of long-term unemployed, who account for 37 percent of the 10.5 million out of work. Many other Americans can only find part-time work or have given up the job hunt.
"The labor market is moving in the right direction but not as quickly as the Fed would like it," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pa.
Moving in the Right Direction
The private sector likely accounted for all anticipated employment gains in March, with government payrolls expected to have declined by 5,000 jobs.
An eighth straight monthly increase in manufacturing employment is expected. Factory job growth has, however, slowed since surging in November. But with auto sales accelerating sharply in March, hiring could pick up in the months ahead.
Construction payrolls are expected to post a third straight increase, even though the housing market is struggling to climb out of a soft patch.
Average hourly earnings probably rose 0.2 percent in March after rising 0.4 percent the prior month, while the length of the workweek likely increased to an average of 34.4 hours from 34.2 hours in February -- another bullish sign.
"The shift in the weather should provide a more meaningful boost to the average workweek," said Daniel Silver, an economist at JPMorgan (JPM) in New York.
"The report will give us a better idea as to whether the pop in average hourly earnings [in February] was related to the unusual weather or representative of a more genuine firming in wage inflation."
9 Numbers That'll Tell You How the Economy's Really Doing
Fading Winter to Lift Payrolls, Push Down Jobless Rate
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.