* Nonfarm payrolls forecast increasing 190,000 in February
* Unemployment rate seen falling to 4.7 percent
* Average hourly earnings expected to rise 0.3 percent
By Lucia Mutikani
WASHINGTON, March 10 U.S. employers likely
maintained a brisk pace of hiring in February and boosted wages
for workers, which is expected to give the Federal Reserve the
green light to raise interest rates next week despite slowing
Nonfarm payrolls probably increased by 190,000 jobs last
month, according to a Reuters survey of economists, in part as
unseasonably mild weather buoyed employment in the construction
sector. The economy created 227,000 jobs in January.
The Labor Department will publish its closely watched
employment report on Friday at 08:30 a.m. (1330 GMT). Fed Chair
Janet Yellen signaled last week that the U.S. central bank would
likely hike interest rates at its March 14-15 policy meeting.
The economy needs to create roughly 100,000 jobs per month
to keep up with growth in the working-age population.
"February employment appears to be the final hurdle for the
Fed to raise interest rates in March, and it's likely to be
easily jumped," said Ryan Sweet, senior economist at Moody’s
Analytics in Westchester, Pennsylvania.
Payrolls could, however, surprise on the upside after the
ADP National Employment Report showed on Wednesday that private
sector employers hired 298,000 workers in February, the largest
amount in a year.
Last month's brisk clip of hiring is expected to have been
accompanied by an acceleration in wage growth, with average
hourly earnings seen rising 0.3 percent in February after
January's paltry 0.1 percent gain. That would lift the
year-on-year increase in wages to 2.8 percent from 2.5 percent
The unemployment rate is seen declining 1/10th of a
percentage point to 4.7 percent in February, even as more people
likely entered the labor market, encouraged by the hiring spree.
With the labor market near full employment, wage growth
could speed up as companies are forced to raise compensation to
retain employees and attract skilled workers.
According to economists, a growth rate of between 3 and 3.5
percent in wages is needed to lift inflation to the Fed's 2
percent target. But inflation is already firming, in part as
commodity prices rise.
BEHIND THE CURVE
Rising inflation, together with a tighter labor, stock
market boom and strengthening global economy, has left some
economists expecting that the Fed could increase interest rates
much faster than is currently anticipated by financial markets.
"The Fed might find itself behind the curve and having to
catch up," said Joel Naroff, chief economist at Naroff Economic
Advisors in Holland, Pennsylvania.
The U.S. central bank lifted its benchmark overnight rate in
December and has forecast three rate increases for 2017.
Job growth has averaged 186,000 per month since January
2010, a recovery that predates Donald Trump's presidency. While
Trump's election victory last November sparked a stock market
rally and jumps in consumer and business confidence, there has
been no surge in both business and consumer spending.
Data ranging from trade to consumer and business spending
suggest the economy slowed further early in the first quarter
after growing at a 1.9 percent annualized rate in the final
three months of 2016. The Atlanta Fed is forecasting gross
domestic product growing at a 1.2 percent rate this quarter.
"It's really surprising that the U.S. is still producing
this many jobs because we are quite close to full employment,"
said Thomas Costerg, a senior U.S. economist at Standard
Chartered Bank in New York. "It's way too early to see the
impact of the new administration's policies."
All sectors of the economy, with the exception of
government, are expected to have expanded payrolls in February.
Manufacturing jobs are forecast to have increased for a
third straight month as rising oil prices fan demand for
machinery. Warm weather last month likely kept crews at
construction sites, boosting payrolls in the sector.
Retail sector employment probably cooled after surprisingly
adding 45,900 jobs in January. Retailers, including J.C. Penney
Co Inc and Macy's Inc have announced thousands of
layoffs as they shift toward online sales and scale back on
Government employment could fall for a fifth straight month
amid a freeze on the hiring of civilian federal government
workers, which came into effect in January.
"We think that overall government payrolls will decline
10,000," said Daniel Silver, an economist at JPMorgan in New
(Reporting by Lucia Mutikani; Editing by Leslie Adler)