OUTLOOK U.S. data to show moderation in March non-farm payrolls growth
WASHINGTON (AFX) - U.S. economic indicators to be released next week will show a notable moderation in March non-farm payrolls growth, and a NAPM index reading indicating that the manufacturing sector remains sluggish, economists said. March non-farm payrolls growth will moderate to 74,000 from February's growth of 135,000, while the NAPM March manufacturing index will rise marginally to 42.0 from 41.9 in February, but still below the critical 50.0 level, according to economists' consensus forecasts. Mike Carey, a U.S. economist at Credit Lonnais in New York said: "The key one is payrolls, second is NAPM, and third would be autos." Asked what a critical payrolls level would be, Sung Won Sohn, chief economist at Wells Fargo & Co in Minneapolis, replied: "If payrolls come in close to 50,000 that would indicate that the economy is slowing, possibly near the edge of a recession." Sohn is forecasting more bullish non-farm payrolls growth in the order of 120,000. The majority of economists who spoke to AFX News expect non-farm payrolls growth to moderate in March from February in reaction to cutbacks in company hiring plans and lower spending on services, a key driver of job growth. Thousands of layoffs in recent weeks by such blue chip luminaries as Solectron Corp, Motorola Inc, Texas Instruments Inc and Bear Stearns Cos Inc are also likely to act as a drag on non-farm payrolls going forward, although many skilled workers are expected to find new positions and the unemployment rate remains near historical lows. Economists will also be closely scrutinising activity in the manufacturing and auto sectors. Banc of America Capital Management analysts expect March auto sales to decline 3.6 pct to 16.8 mln units compared with sales of 17.4 mln units in February in the coming week. "The NAPM will set the tone for manufacturing given what we saw in the Chicago (report), a pretty dramatic decline, people are going to be wondering if the manufacturing sector is just going to continue to fall further at a national level," said Carey, who is forecasting a slight drop in the index to 41.4. Manufacturing remains one of the most depressed sectors of the U.S. economy, and Friday's report from the Chicago Purchasing Management Association showed little evidence that a sector rebound is on the cards just yet. Friday, the Chicago Purchasing Management Association said its index (PMI) of regional business activity fell significantly below market expectations to 35.0 in March from 43.2 in February, marking its lowest level since March 1982. Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, said in a note to clients that the Chicago PMI is not a component of NAPM, where a completely new survey is taken. "So this drop does not ensure a lower NAPM. But it makes it much more likely." Any sub-50.0 reading in the NAPM index signals a slowdown in business spending activity. The market will also be focused on Congress Wednesday morning as Federal Reserve Chairman Alan Greenspan testifies before a Senate finance committee on U.S. trade policy. On Thursday, some of that attention will shift to the board room of Alcoa Inc, formerly run by Treasury Secretary Paul O'Neill, which is the first Dow Jones Industrial Average component to report its first quarter 2001 results. The Fed Chairman is also due to speak Friday at a Fed Conference on financial markets. Economists who spoke to AFX News are recasting the change in first quarter annualized GDP in a wide range, from a 0.5 pct contraction to a gain of 2.0 pct. Following are the consensus forecasts of Wall Street economists for data to be released next week. FEB CONSTRUCTION SPENDING, Monday (10.00 am): Economists expect February construction spending to increase 0.2 pct after spending rose strongly above expectations by 1.5 pct in January, marking the biggest rise since March 2000. NAPM MARCH MANUFACTURING INDEX, Monday (10.00 am): Economists forecast that the NAPM March manufacturing index will rise marginally to 42.0 after the index posted a reading of 41.9 in February. A reading below 50.0 continues to indicate the manufacturing sector remains stuck in a slowdown. FEB FACTORY ORDERS, Tuesday (8.30 am): Economists said February factory orders will rise 0.1 pct after orders fell below expectations and declined 3.8 pct in January on the back of December's 0.6 pct rise. January's decline into negative territory was largely attributable to falling demand for transportation equipment, and weaker auto shipments. NAPM MARCH NON-MANUFACTURING INDEX, Wednesday (10.00 am): Forecasts indicated that the NAPM March non-manufacturing index will decline marginally to 51.6 after the index posted a reading of 51.7 in February. WEEKLY JOBLESS CLAIMS, Thursday (8.30 am): Forecasts showed that weekly initial claims for regular state unemployment benefits will increase by 9,000 to 371,000 for the week ended March 31, after claims fell 20,000 to a seasonally adjusted 362,000 for the week ended March 24 from the previous week. MARCH EMPLOYMENT REPORT, Friday (8.30 am): Economists said the March non-farm payrolls growth will moderate to 74,000 after non-farm payroll employment rose above expectations by 135,000 in February. However, January's payrolls growth was evised down by 44,000, with most of the revision in manufacturing. March's unemployment rate is seen increasing slightly to 4.3 pct after the unemployment rate unexpectedly held steady at 4.2 pct in February. Average hourly earnings are forecast to slowdown to 0.3 pct after average hourly earnings rose slightly above forecasts by 0.5 pct in the previous month. FEB WHOLESALE TRADE, Friday (10.00 am): Economists expect February wholesale trade inventories to rise 0.1 pct after inventories increased 0.3 pct in the previous month. FEB CONSUMER CREDIT, Friday (3.00 pm): Economists said the pace of consumer borrowing is forecast to moderate to a seasonally-adjusted 9.0 bln usd after borrowing rose above expectations to 16.1 bln usd in January.
Related stock : (NIL)