U.S. job growth likely picked up enough in February to encourage the Federal Reserve to continue to scale back its monetary stimulus, although the gain is likely to be tepid given the unrelentingly harsh winter weather.
Employers probably added 150,000 workers to their payrolls last month, according to a Reuters poll of economists, up from the similarly weather-depressed levels of 113,000 in January and 75,000 in December.
An unusual amount of uncertainty surrounds the forecast, however, given that winter storms pummeled densely populated areas with snow and ice during the week employers were surveyed. Estimates range from a low of 95,000 to a high of 235,000.
“We cannot remember another year when inclement weather persisted for three consecutive payroll periods,” said Peter D’Antonio, an economist at Citigroup in New York.
“Although there were normal temperatures during the February survey week, the polar vortex that froze much of the East during the period between surveys probably limited hiring activity.”
Unusually cold temperatures have gripped much of the country since December and been blamed for a sharp decrease in hiring.
Nonfarm payrolls averaged about 205,000 jobs per month in the first 11 months of in 2013. For December and January, that figure dropped to just 94,000.
Economists estimate the weather could depress February payrolls by between 25,000 and 50,000 jobs.
The Fed, which is dialing back the amount of money it is injecting into the economy through monthly bond purchases, has viewed the weakness as largely weather-related and temporary.
Most economists agree.
“Other economic data gives us the sense that underneath the snow and ice there is a current of economic momentum and once we get through the weather effects we will see some bounce-back,” said Robert Dye, chief economist at Comerica in Dallas.
“My expectation is that we see a number above 120,000 and the Fed interprets it as sufficient to continue with reductions to its monthly bond purchases.”
Data on consumer and construction spending, and new weekly filings for unemployment benefits suggest resilience in the economy. A measure of hiring by small businesses hit a six-year high in January.
In addition, factor activity shows signs of regaining some of the strength sapped by severe weather in December and January.
The Labor Department will release the monthly jobs report, which is closely watched by financial markets around the globe, on Friday at 8:30 a.m..
UNEMPLOYMENT AT FIVE-YEAR LOW
The unemployment rate is forecast holding steady at a five-year low of 6.6 percent in February.
There is, however, a chance of a decline as some of the more than one million long-term unemployed who lost jobless benefits stop their job hunts. This means they would no longer be considered as unemployed and in the labor market.
All the job gains in February were most likely in the private sector. Government payrolls are expected to have dropped, but not as steeply as January’s 29,000 jobs decline.
Manufacturing employment is expected to rise for a seventh straight month, though the pace of hiring probably slowed from the 21,000 jobs added in January.
Construction payrolls, which surprised in January by logging their biggest one-month gain in nearly eight years, are expected to have declined last month because of bad weather.
Some economists point to the strong gains in manufacturing and construction in January as an indication that weather is not behind the cooling in hiring.
A rebound is expected in education and health services employment after two straight months of declines. This sector is normally associated with solid job gains.
Average hourly earnings probably rose 0.2 percent after rising by the same margin in January. The length of the workweek likely held steady at an average of 34.4 hours, but severe weather could have reduced hours for some workers.