By Kasra Kangarloo

WASHINGTON (MNI) – The week ahead will be book-ended by two of the
month’s most important indicators: the March Institute for Supply
Management manufacturing index, and March’s employment report out
Friday.

Private payrolls are expected to rise by more than 200,000 for the
fourth straight month, which could push the unemployment rate down
another tenth of a percentage point to 8.2%, the lowest since January
2009. A weak payrolls number, however — even one between 100,000 and
200,000 — could seriously weaken the case for a sustainable economic
recovery.

Since the beginning of the recession there have already been
periods when a few months of solid jobs growth seemed to put full
recovery within reach, only to sputter out into many months of
negligible job creation.

Another caveat for this month’s payrolls report: it’s released on
Good Friday, one of the few holidays where markets close early but the
federal government remains open. Regardless of what the numbers look
like, expect big swings in markets due to low trading volume.

The February ISM manufacturing index disappointed, falling for the
first time in four months to 52.4 and weakening in key sub-indices such
as new orders and production, despite strong regional manufacturing
reports.

The March report, to be released Monday at 10:00 a.m. ET, is
expected to rise slightly, though the regional surveys have been so far
mixed and the survey with the strongest correlation to the national
figure, the MNI Chicago report, was just released Friday.

Another fall in the ISM index could put it perilously close to the
sub-50 range, which would indicate that the national manufacturing
sector is contracting, and would send another conflicting signal to
markets about the true strength of the recovery.

Auto sales have led the narrative on improving consumption, with
replacement spending surging in recent months as the average age of U.S.
cars hit an all-time high in 2011. The March sales figures, to be
released throughout the day Tuesday, may pull back slightly from the
previous month’s increase though would still be in strong territory.

The minutes for the March meeting of the Federal Open Market
Committee, to be released Tuesday at 2:00 p.m. ET, could illuminate the
Fed’s understanding of the economic recovery, as well as what plans they
have if the recovery should continue apace.

Although no changes to policy were made at the last meeting, Fed
Chairman Ben Bernanke recently noted in a speech that the Fed would
still need to keep interest rates low even as the economy recovered,
something that has run contrary to market expectations as the jobs
market has improved.

Other releases over the week related to the jobs market include
initial jobless claims Thursday at 8:30 a.m. ET, which are expected to
continue their downward trend, the March ADP employment report Wednesday
at 8:15 a.m. ET, and the Challenger layoffs report Thursday at 7:30 a.m.
ET.

March ISM non-manufacturing will also be released Wednesday at
10:00 a.m., February factory orders will be released Tuesday at 10:00
a.m. and February consumer credit will be released Friday at 3:00 p.m.

St. Louis Fed President Bullard will give two speeches on monetary
policy at 10:00 a.m. ET Monday and Thursday at 9:10 a.m. ET, San
Francisco Fed President Williams will be speaking Tuesday at 4:05 p.m.
ET and Wednesday at 11:00 a.m. ET. Cleveland Fed President Pianalto will
be speaking Monday at 12:35 p.m. ET.

–Kasra Kangarloo is a reporter with Need To Know News In Washington

** MNI Washington Bureau: 202-371-2121 **

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