The U.S. may add as many as 300,000 jobs in March, the most in four years, setting the stage for what some economists say will be sustained employment gains.
Better weather, hiring of temporary government workers and a growing economy may bring the biggest job increases since March 2006, said David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The rise would be the second since President Barack Obama took office in January 2009. — Bloomberg.com 3/9/2010
Now one full year into the current bull market, there remains one economic issue still hanging over all other concerns: jobs. The US economy has continued to shed jobs albeit at a slower pace, even as other economic concerns have stabilized. To date 8.4 million jobs have been lost since the recession began in December 2007, and the rates of unemployed and underemployed remain extremely high. All the while, the S&P 500 has advanced nearly 70% as reduced headcount has increased profitability, and pundits often speculate as to the sustainability of this jobless recovery.
Last month, the US lost 36,000 jobs, which was better than expected. Prompted by the data, Senate Majority Leader Harry Reid put his foot in his mouth when he said on the Senate floor, “Today is a big day in America. Only 36,000 people lost their jobs today, which is really good.” After that blunder, the report on Bloomberg.com struck us in just how optimistic it is towards March’s employment data, thanks in part to temporary hiring for census workers which could add more than 100,000 jobs this month. However, a strategist for Goldman Sachs (GS) estimated 275,000 job gains; another economist predicted “easily” reaching 300,000. Chief US economist at Deutsche Bank (DB) took the prize though, saying that a gain of 450,000 “can’t be ruled out.”
To be clear, there is nothing that we would rather see in this month’s report and upcoming months than strong jobs growth. Growing employment would be a major boon to the US economy and would be a shot in the arm against the possibility of a double-dip. However, we have to be honest with ourselves and census jobs should really be stripped out of the understanding of job growth. The census will only employ these workers through mid-summer and then workers will go back looking for stable employment. The rest of these cheery predictions seem to be based upon improving weather because a particularly harsh winter must be nearing an end. There is no doubt that warming weather may boost some types of employment, but a few hundred thousand jobs being created because of rising temperatures seems to be a lot of hope and light on substance.
Of course, no one can predict the future and predictions about macroeconomic data points are extremely thorny. As much as we would like to believe they are correct and job growth will return in robust fashion, we are a bit skeptical. They have raised the bar for expectations, so it will be extremely interesting to see the market’s reaction when the data comes in.
