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The March non-farm payrolls report isn’t for nearly two weeks, but it’s not too early to start banging the drums now, and getting excited.In his Sunday evening note to investors, Morgan Stanley’s Joachim Fels discusses the meh recovery, and touches on why the jobs report won’t be as hot as previous ones:
Our US team continues to see GDP tracking at a meagre 1.7% in the current quarter, and attributes most of the decent labour market data in recent months to unusually mild winter weather. In fact, the four-week average of initial jobless claims has now been very little changed for a month and the big improving trend from mid-September to mid-February has thus now stalled. Our initial forecast for March non-farm payrolls, due on April 6, is that job growth will moderate to +175k, down from the average +245k gains in the three prior months, with a bigger weather-related payback likely ahead in the spring. Moreover, softer-than-expected housing market data provided a useful reminder that, contrary to a widespread view, the sector that was the epicentre of the Great Recession may still not have bottomed yet. If our cautious view on growth is right, the Fed has more work to do and will likely implement additional easing measures in coming months, with an extension of Operation Twist, including sterilised MBS purchases. All eyes are on Ben Bernanke’s speech this Monday at the NABE conference, where he has an opportunity to push back on the market’s substantial shifting forward of expectations of the first Fed rate hike to late 2013 or 2014.
On that last point, Bernanke… we’ll be covering that tomorrow to get any hints of what the Fed might do.
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