Jump in Payrolls Adds to Quarter’s Strong Growth

A gain in payrolls last month and stepped-up manufacturing activity capped what was probably the strongest quarter for U.S. economic growth in more than two years, economists said in advance of reports this week.

Employers probably added a net 190,000 workers to payrolls in March, bringing the number of jobs created last quarter to 603,000, according to the median forecast in a Bloomberg News survey.

Manufacturing expanded at the fastest pace in five months, a private survey is also projected to show.

More jobs and rising incomes led to a rebound in consumer spending that propelled growth to an annual rate of 4.7% from January through March, the best performance since the third quarter of 2003, according to the median forecast of economists surveyed last month.

Businesses are investing more in new equipment and inventories to meet demand, keeping the nation’s production lines chugging.

“The labor market data continue to indicate strong job growth,” said Dean Maki, chief U.S. economist at Barclays Capital in New York. “We expect the economy to grow more strongly in the near term.”

The Labor Department will issue its March employment report Friday. The unemployment rate probably held at 4.8% for a second month, compared with a four-year low of 4.7% in January, according to the survey median. The number of jobs added last quarter would be the most since the last three months of 2004.

The Institute for Supply Management’s manufacturing index for March, which is due today, is projected to rise to 57.5, the highest since October, from 56.7, the survey showed. A reading of above 50 indicates growth in the sector, while a reading below points to a contraction.

Last quarter’s projected strong economic growth would represent a rebound from a sluggish fourth quarter of 2005. The economy grew at an annual rate of 1.7%, the slowest pace in almost three years, from October through December.