For months, economists have pointed to various indicators suggesting employment is rebounding only to see their optimism dashed by the monthly payroll report.

As a result, the jobs question has taken center stage among the aspirants for the presidential nomination. And politicians from both political parties will be watching Friday’s February employment report with special interest.

“It has taken on a new dimension of importance because all other economic indicators have been doing well,” said Chicago economist Carl Tannenbaum. “It has been a glaring hole in our economic survey.”

Last week, another report, the Chicago purchasing managers index, appeared to indicate that Friday’s report could finally be the pleasant surprise everyone has been waiting for. The jobs component of the purchasing managers index unexpectedly surged to the best level since 1988, rising to 54.8 from 48.3.

“It is very encouraging,” said Tannenbaum, the chief economist of LaSalle National Bank. “But we have had a lot of encouraging signs for the past few months. We have seen claims for unemployment insurance fall, we have seen help-wanted listings lengthen, but I would like to see hard numbers.”

Tannenbaum and other economists probably won’t be seeing the hard numbers they’re looking for in the February report, according to Tim O’Neill, chief economist of BMO Financial Group and Harris Bank.

“We’re looking at something in the range of 140,000 new jobs to 150,000 new jobs,” he said, noting that would be a modest improvement over the January report, which showed only 112,000 new jobs were created while the unemployment rate dropped to 5.6 percent.

But, O’Neill said, “all the signs are really pointing to a pretty solid and really strong recovery. Eventually, it has to show up in the job market.”

Momentum is a good thing. That’s what seems to be what is taking hold in the manufacturing sector.

Last week’s upward revision in the fourth-quarter gross domestic product, to 4.1 percent from 4 percent, indicates a strengthening manufacturing sector. Economists had expected a downward revision to 3.6 percent.

Monday’s report on February manufacturing should be strong again, according to Chicago economist Robert Dederick. Although he said the index should fall to 61.5 from January’s 63.6, a figure above 50 indicates the sector is expanding.

“Manufacturers are showing increasing willingness to spend on capital goods and inventories,” said Dederick, of RGD Economics.

A raft of other reports is scheduled to be released this week. January construction spending and that month’s personal income and spending are due out Monday. February auto sales are scheduled for Tuesday. The Federal Reserve beige book is due out Wednesday, along with the February non-manufacturing report. Chain store sales for February and January factory orders should be out Thursday.

Of the group, watch for the car and truck sales. After falling to an annualized rate of 13.2 million units in January, most economists are expecting to see a rebound to about 13.5 million units.

It was another ho-hum month on Wall Street as the stock market finished the month without a sharp rise, but more importantly without a sharp loss.

The Standard & Poor’s 500 index rose about 1.5 percent for the month, while the Nasdaq composite index was down about the same amount.

“The consolidation that began late last year continues with this choppy market,” said Marshall Front, of Front Barnett Associates, who said corporate America is continuing to post better profits than Wall Street has anticipated.

“With profits rising faster than anticipated and the Federal Reserve unlikely to move for a number of months (to boost interest rates), inflation benign and job growth continuing to expand, the backdrop for investing in the market continues to be favorable.”

—

(c) 2004, Chicago Tribune.

Visit the Chicago Tribune on the Internet at http://www.chicagotribune.com/

Distributed by Knight Ridder/Tribune Information Services.

AP-NY-02-27-04 1759EST