Americans are returning to the workforce in large numbers, and that should show in the March employment report.
Economists polled by Dow Jones expect 675,000 jobs to be created in March if the economy opens further and the number of people vaccinated increases. The unemployment rate is expected to decrease from 6.2% in February to 6%.
“When it comes to the economy, things are looking good,” said Shawn Snyder, director of investment strategy at Citi US Wealth Management. He said Citigroup expects 600,000 jobs in March. “But the whisper number on the street is closer to a million, so expectations are pretty high.”
The payroll report is scheduled to be released on Friday at 8:30 a.m. CET. The stock exchange is closed on Good Friday, but the bond market is closed for half a day.
In February, 379,000 new jobs were added. That number would have been 100,000 higher had it not been for winter storms that caused power outages in Texas and freezing temperatures in the south, said Stephen Stanley, chief economist at Amherst Pierpont. Those lost jobs could show up in March.
“I think March will be the first in a series of very strong numbers. I expect 850,000 for payroll and we could bring the unemployment rate down to 5.9%,” Stanley said. “It’s not as strong as what we’re going to see in April and May. I think we could see a series of three or four months where we have an average of over 1 million jobs.”
He expects the job market to “come back quickly” starting with the March report.
Stanley added that there are already isolated indications that the leisure sector is struggling to fill jobs, as is other sectors. “You look at the ISM and production is starving for workers,” he said. The Institute for Supply Management announced that its manufacturing index rose to 64.7, its highest level since December 1983.
The economist also said he examined economic data for signs of inflation. Stanley expects prices to rise due to the base effect of last year’s weakness as well as a surge in demand. Economists will closely monitor the wage component of the employment report to see if inflation is showing up in wages. They only expect the average hourly wage to increase 0.1% in March after a 0.2% increase in February, according to Dow Jones.
According to the Bureau of Labor Statistics, 10 million people were unemployed in February, compared with 5.7 million the previous year. At that time the unemployment rate was a low 3.5%.
“Once people are vaccinated and schools reopen and parents no longer have to stay home with their children, literally millions of people will be back in work,” Stanley said. “I think this ISM number is the first in a long line of very good indicators.”
Economists expect a business book in the second quarter as more people get stimulus payments and vaccination shots. According to the Centers for Disease Control and Prevention, more than 16% of the US population was fully vaccinated as of Thursday. More people are already traveling, eating out, and participating in other activities as states relax restrictions.
“More than half of all job growth will be in the leisure and hospitality industry as restrictions on restaurants, bars and gyms are lifted,” said Diane Swonk, chief economist at Grant Thornton.
Swonk expects 1 million new jobs to be created in March. She said part of this will be recruitment that took place in February.
“It’s a combination of catching up from February and the lifting of restrictions. Those are the two biggest things,” said Swonk. Construction is an area that could see recruitment pick up after losing 61,000 jobs in February, many due to weather conditions.
In February, the leisure and hospitality industries created 355,000 jobs as restaurants, hotels and gambling reopened. However, the sector was still down 3.5 million jobs, or 20.4% year over year.