Americans are beginning to return to the workforce in big numbers, and that is likely to show up in the March employment report.
Economists polled by Dow Jones expect to see 675,000 jobs added in March as the economy reopened more broadly, and the number of vaccinated people increased. The unemployment rate is forecast to fall to 6% from 6.2% in February.
“When it comes to the economy, things are looking up,” said Shawn Snyder, head of investment strategy at Citi U.S. Wealth Management. He said Citigroup expects 600,000 jobs to have been created in March. “But the whisper number around the street is closer to a million, so expectations are pretty high.”
The payroll report is scheduled for release at 8:30 a.m. ET on Friday. The stock market will be closed for Good Friday, but the bond market will be open for a half day.
In February, 379,000 jobs were added. That number would have been about 100,000 higher if not for winter storms that caused power outages in Texas and sub-freezing temperatures across the south, Amherst Pierpont Chief Economist Stephen Stanley said. Those lost jobs could show up in March.
“I think March is going to be the first one of a string of very strong numbers. I’m expecting 850,000 for payrolls and we could have the unemployment rate coming 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 string of three or four months where we average over 1 million jobs.”
He expects the job market to “come back quickly,” starting with the March report.
Stanley added there are already anecdotal signs that the leisure sector is having problems filling jobs, as are other areas. “You look at the ISM, and manufacturing is starving for workers,” he said. The Institute for Supply Management said its manufacturing index jumped to 64.7, the highest level since December 1983.
The economist also said he has been watching economic data for signs of inflation. Stanley expects to see prices rising because of the base effect from last year’s weakness as well as a burst in demand. Economists will be paying close attention to the jobs report’s wage component to see if inflation is beginning to show up in wages. They expect just a 0.1% increase in average hourly wages for March after a 0.2% rise in February, according to Dow Jones.
There were still 10 million people counted as unemployed in February compared to 5.7 million a year before, according to the Bureau of Labor Statistics. At that time, the unemployment rate was a low 3.5%.
“Once people are vaccinated, and once schools reopen and parents don’t have to stay home with their children, I think you’re going to see literally millions of people coming back into the labor force,” Stanley said. “I think this ISM number is the first of what’s going to be a long series of very good indicators.”
Economists expect an economic book in the second quarter as more people receive stimulus payments and vaccine shots. More than 16% of the U.S. population was fully vaccinated as of Thursday, according to data from the Centers for Disease Control and Prevention. Already more people are traveling, eating at restaurants and participating in other activities as states ease restrictions.
“Over half of all job gains are going to be in leisure and hospitality because of lifting restrictions on restaurants, bars, gyms,” Grant Thornton Chief Economist Diane Swonk said.
Swonk expects to see 1 million new jobs created in March. She said some of that will be hiring that would have taken place in February.
“It’s a combination of catch up from February and restrictions lifting. Those are the two biggest things,” Swonk said. Construction is one area that could see a pickup in hiring after February’s loss of 61,000 jobs, many due to weather.
In February, the leisure and hospitality industry added 355,000 jobs as restaurants, hotels, and gambling reopened. But the sector was still down 3.5 million jobs, or 20.4%, from a year earlier.