Economic Preview: U.S. seen adding almost 700,000 jobs in March as the economy revved up

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The U.S. may have added the most new jobs in March in at least six months — Wall Street predicts a nearly 700,000 gain — as the economy revved up after a winter hiatus.

Here’s what to watch in Friday’s employment report.

Market Extra: The Good Friday jobs report will be released to a closed stock market — which has only occurred 12 times since 1980

Jobs forecast

Businesses and government probably created some 675,000 jobs in March, based on a survey of economists by Dow Jones and The Wall Street Journal.

Such an increase would be the largest since October, just as the coronavirus pandemic began to surge again.

By contrast, the U.S. created 379,000 jobs in February and 166,000 in January.

The record increase in cases at the end of last year slammed the brakes on the economy and even caused the U.S. to lose jobs in December for the first time since the onset of the pandemic.

Yet after a sharp decline in coronavirus cases in early 2021, governments have loosened restrictions on businesses. Many companies have begun to hire again, especially at restaurants, hotels, airlines and other industries that were hurt most by the pandemic.

Some economists predict even larger employment gains in March that could push the number closer to one million.

Read: Consumer confidence surges to a pandemic high

Unemployment rate

The official unemployment rate is forecast to slip to 6% in March from 6.2% in the prior month.

If only it were that low. The Federal Reserve and other economists say the real jobless rate is closer to 10%. How come?

The official jobless rate doesn’t capture some 4 million people who simply stopped looking for work. That’s one problem. And many unemployed people surveyed by the government still haven’t accurately described their current status, believing they are only temporarily out of work instead of permanently unemployed.

A little-noticed unemployment rate known as U6 that’s also compiled by the government showed the jobless rate at 11.1% in February. The U6 rate includes people too discouraged to look for work and those who can only find part-time jobs.

Onetime factors

The headline figure on new jobs is likely to get a boost from a pair of fleeting factors.

For one thing, the weather was unusually poor in February and some people were unable to work. Texas and nearby parts of the south experienced a severe freeze that temporarily shut down large parts of their economy. Those workers had returned back to their jobs by early March.

The government’s process for seasonal adjustments could also inflate job gains.

Last year, the U.S. shed 1.69 million jobs in March as the coronavirus swept across the country. Including that number in seasonal adjustments would make any increase this March look better by comparison.

See: A visual look at how an unfair pandemic has reshaped work and home

The government has altered its formula to take the pandemic into account, but a lot of guesswork is involved.

No matter. The evidence is clear that hiring accelerated in March.

Giant payroll processor ADP, for example, said private-sector companies generated 517,000 new jobs last month while an employment gauge of American manufacturers jumped to a three-year high

Service boom

The industries that lost the most jobs early in the pandemic are the ones that appear to have done most of the hiring in March. Namely “leisure and hospitality” companies such as restaurants.

Information collected by OpenTable, a site that tracks restaurant reservations, points to an increase of as many as half-a-million jobs last month. Warmer weather, lax governments restrictions and more people going out to eat encouraged businesses to boost staff.

While these jobs pay less than the national average, millions of Americans still rely on them to make a living and leisure and hospititality remains a key part of the U.S. economy.

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