NEW YORK (
) -- Investors will welcome a steady stream of economic data in the holiday-shortened coming week, none weightier than the government's latest assessment of the labor market.
When asked about the market-moving events he'll be eyeing, Phil Orlando, chief equity market strategist at Federated Investors, said it best.
"It's jobs, jobs, jobs," he said. "We believe the March number is going to be the first in a series of significant, positive nonfarm jobs reports. We're clearly at an inflection point in the cycle right here."
Indeed, investors will get an appetizer Wednesday morning when Automatic Data Processing unveils its own employment report. Weekly initial jobless claims figures, a regular staple of a balanced economic data diet, will also come due on Thursday.
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But the main course, so to speak, will be released on Friday at 8:30 a.m. EST when the Bureau of Labor Statistics unveils its March job numbers. If many economists and analysts are to be believed, the report could be a turning point. The early Street consensus is anticipating that nonfarm payrolls picked up 200,000 jobs during the month after employers shed 36,000 jobs in February, according to Briefing.com. Meanwhile, many foresee the nation's unemployment rate holding steady at 9.7%.
Orlando said several observations are fueling his optimism. As a leading economic indicator, first-time applications for state unemployment insurance have dropped dramatically since their peaks last year. Also, the February report could have turned positive. Orlando said reporting may have been diluted because of weather, citing a government statistic that 1.03 million people didn't make it to work at one point during the month because of blizzard-like conditions.
"So, we're thinking March is going to be 200,000 or better," Orlando said. "We ought to see the first in what we believe is going to be a sustainable series of nonfarm payrolls."
Some, however, are feeling less hopeful. Michael Pento, chief economist at Delta Global Advisors, said businesses continue to struggle with bank lending among other things, making hiring much more difficult. He's also one of several voices expecting a pickup in census hiring to overshadow more organic private-sector growth in the report.
"The word on the Street is up 100,000 to 300,000 jobs," said Pento, who remains steadfast about an impending double-dip recession. "Now, I think there could be as many as 100,000 census workers, but I don't consider them jobs. They're part-time jobs, they don't pay very well, they're not economically viable, they're not sustained by the free market, they're not accretive to economic growth. You have to X-out census workers."
"You could eke out a small positive gain in private-sector employment," he added. "Is it going to be enough to reduce the unemployment rate significantly? Not at all. Will it be enough to get the
off of neutral? Absolutely not."
But the immediate reaction to the jobs report will be a muted one, since the stock market will be closed the day of the release in observance of Good Friday. (Bond markets, however, will be open Friday morning.) Traders will position themselves in advance of the report and the three-day weekend. Gary Flam, portfolio manager at Bel Air Investment Advisors, said to look for traders to ratchet down their exposure as the week goes on.
"Given that you're going into a three-day weekend and you've had a run in the market, I think as you go through this week you'll probably see a pullback in the market as traders take their money off the table going into both the long weekend, as well as one where you're going to see an important economic data point," Flam said. "Even though expectations are for a strong data point, I'd still expect to see, as the week goes on, some of that money coming off the table as people try to flatten out their exposure."
Despite the intensive focus on jobs, a few other data points will garner investor interest next week. Personal income and spending figures from the Commerce Department will be available Monday morning, while home price and consumer confidence numbers will be released Tuesday. Investors will welcome vehicle sales numbers Thursday.
The week will also offer a snapshot of the nation's manufacturing sector. Wednesday's release of Chicago PMI, a regional reading on manufacturing activity, might show a step back. Analysts expect the index to register 61 in March, down from 62.6 in February. But a manufacturing report from the Institute for Supply Management will come out on Thursday, with forecasts calling for its index to edge higher to 57 in March from 56.5.
"I think the new-orders components in both will be very important to showing momentum," Flam said. "
They will give investors a heads up of where we can see the economy six months down the road."
"If new orders are a little weak, I think that could be signaling economic momentum not rolling over, but clearly leveling out -- that could be a leveling out for the market in general," he added.
Next week also brings a light earnings schedule, though names like
Research In Motion
are scheduled to report.
Investors will also continue to eye macro developments, both foreign and domestic. Investors breathed a sigh of relief this week after word spread of a plan of last resort to bail out Greece with the help of the International Monetary Fund. And with health care legislation in the books, market observers will be looking for any details on Congress's next target: financial regulatory reform.
Stocks flattened Friday with the
adding 9 points, 0.1%, to 10,850 and
Bank of America
turning in the average's best performance.
-- Written by Sung Moss in New York