How Long Before We Start Seeing Job Gains?

By David Berman

Investors remain upbeat about the latest look at U.S. monthly payrolls numbers. As we’ve already reported, employers shed another 36,000 jobs in February, a month that saw terrible storms that may have affected the numbers. But what’s driving the enthusiasm in Friday’s markets is the fact that the losses were far less than expected and, perhaps more importantly, some observers expect job gains are just around the corner.

Here are a few comments from economists to that effect.

Sal Guatieri, economist, BMO Nesbitt Burns: “If not for the weather, payrolls may have risen modestly in February. While companies have yet to ramp up hiring, labour markets are healing and the unemployment rate is stabilizing. The strength in household employment, which tends to capture turning points a little sooner than payrolls, likely flags sustained job growth ahead.”

Ian Shepherdson, chief U.S. economist, High Frequency Economics: “The Bureau of Labor Statistics says ‘it is not possible to quantify precisely the net impact of the winter storms’ on payrolls. But it was surely not negligible so we assume payrolls ex-weather would have been positive; the improving trend continues, despite a 0.3% dip in hours worked. Census hiring was only 15,000; many more to come, boosting payrolls March-June.”

Stéfane Marion, chief economist and strategist, National Bank Financial: “So what is the underlying trend in U.S. labor markets? To find the answer, we recommend switching to the ‘weather-repellent’ household survey from which the unemployment rate is derived. This survey is normally more volatile, but unlike the establishment survey from which payroll jobs are derived, it is much less impacted during episodes of severe weather conditions. As it turns out, the household survey showed an increase of 308,000 jobs in February, the second increase in a row. The three-month moving average indicates that job creation has already resumed in the U.S., a development that we expect to see confirmed by the payroll survey as soon as next month.”