Jobs report could sway Fed rate hike

Paul Davidson , USA TODAY6:30 a.m. ET March 6, 2017

If there’s anything that could dissuade the Federal Reserve from raising interest rates at a mid-March meeting, it’s this week’s pivotal jobs report for February, though most economists expect strong numbers. The employment survey highlights a light week of economic releases that also features data on factory orders, trade and consumer credit.

Factory orders rose 1% in December, but 2016 overall marked a second straight down year, with orders falling 1.4%. With rebounding oil prices spurring a revival in drilling activity and related investment and the global economy picking up recently, analysts expect a better performance in 2017. Economists expect the Commerce Department on Monday to report a 1% increase in factory orders for January.

Manufacturing grows at fastest pace since 2014

Since President Trump has called for a tougher U.S. stance on trade, particularly with China and Mexico, the monthly data on the nation’s trade gap is getting more attention. The deficit narrowed in December to $44.3 billion but rose to about $500 billion for 2016, the highest level in four years. Advance readings show January exports fell while imports increased, notes Nomura economist Lewis Alexander. And so economists reckon Commerce on Tuesday will announce the trade gap widened further in January to $46.5 billion.

Consumer credit growth was strong last year as Americans stepped up their use of credit cards after a caution that lingered for years after the recession. Meanwhile, auto and student loans have been advancing sharply for several years. Shoppers’ growing propensity to rely on the plastic generally has been viewed as a boost for consumer spending. But recently, rising auto and credit card delinquencies have prompted some banks to toughen lending standards for borrowers with spotty credit histories. Yet after outstanding consumer credit increased a relatively modest $14.2 billion in December, economists expect the Fed to report a more typical $19 billion rise in January.

Jobless claims at 44-year low as labor market tightens

All signs are pointing to further healthy job gains in February after a strong 227,000 additions in January. An index of last month’s service-sector activity, released Friday, recorded the fastest expansion in 16 months and a measure of employment also revealed sharper growth, possibly signaling stronger hiring. Meanwhile, initial jobless claims, a gauge of layoffs, have hovered near four decade lows. Economists expect the Labor Department on Friday to report a solid 185,000 job gains. And many economists expect wage growth, which was surprisingly sluggish in January, to rebound to 2.8% annually. With Federal Reserve officials increasingly signaling a rate hike at the Fed’s March 14-15 meeting is likely, it likely would take both weak employment growth and sluggish pay gains to prompt them to seriously consider standing pat.