Bloomberg News

U.S. Payrolls Probably Picked Up in Sign Economy Rebounding

July 08, 2011

(Adds Obama to make statement in fifth paragraph.)

July 8 (Bloomberg) -- Employers in the U.S. probably added more workers in June than the prior month, indicating the labor market may be poised to pick up in the second half, economists said before a report today.

Payrolls rose by 105,000 workers after a 54,000 increase in May that was the smallest in eight months, according to the median of 85 estimates in a Bloomberg News survey. The projected gain probably failed to reduce the jobless rate, which economists forecast held at 9.1 percent.

Cheaper fuel that helps companies hold down costs may make it easier for them to step up hiring, setting the stage for a pickup in the consumer spending that accounts for about 70 percent of the economy. While the improvement reinforces the Federal Reserve’s view that the first-half slowdown was temporary, bigger payroll gains are needed for a sustained decline in the unemployment rate.

“Payrolls will start to look better in the second half as the economy shifts into higher gear,” said Christopher Low, chief economist at FTN Financial in New York. “We do have job growth, but it’s not enough. It’ll take a long time for the unemployment rate to come down significantly.”

The Labor Department’s payroll numbers are due at 8:30 a.m. in Washington. Bloomberg survey estimates ranged from increases of 40,000 to 175,000. President Barack Obama is due to make statement on the report at 10:35 a.m., the White House said.

Company Payrolls

The projected gain would be less than the 166,000 monthly average in the first quarter. Payroll increases of at least 200,000 a month are needed for a sustained decline in the unemployment rate, Low said.

Private payrolls, which exclude government agencies, increased by 132,000 after rising 83,000 in May, according to the survey median. Manufacturing employment probably rose by 5,000 in June, the figures may show.

Recent figures have shown the economy has started to perk up. Companies added twice as many workers as forecast last month, data from ADP Employer Services showed yesterday. An Institute for Supply Management report last week showed manufacturing unexpectedly accelerated in June.

The figures helped drive stocks higher. The Standard & Poor’s 500 Index jumped 1.1 percent to an almost two-month high yesterday. In Europe today, stocks were little changed amid renewed concern about the region’s debt crisis, with the Stoxx Europe 600 Index slipping 0.1 percent.

U.S. stock-index futures fell, with futures on the S&P down 0.2 percent to 1,349.7 at 11:48 a.m. in London.

Estimates in the Bloomberg survey for the unemployment rate ranged from 8.9 percent to 9.2 percent.

First Half of 2011

Policy makers “expect the unemployment rate to continue to decline but the pace of progress remains frustrating slow,” Fed Chairman Ben S. Bernanke said at a news conference after the central bank’s June 21-22 monetary policy meeting.

Fed officials have said the slowdown in economic growth in the first and second quarters partly reflected temporary factors. Manufacturers were hurt by supply disruptions in the aftermath of the earthquake in Japan, just as the surge in gasoline expenses limited spending on non-essential items by American consumers.

Central bankers in other countries are turning to tackling inflation after seeking to boost growth. Interest rates were raised this week in Sweden, the euro-area and China. China may now limit increases for the rest of the year after five shifts since mid-October, according to JPMorgan Chase & Co. and HSBC Holdings Plc. South Korea, India, Chile, Brazil and Poland have also all tightened monetary policy in the past month.

‘Improving Slowly’

While investors anticipate a further increase from the ECB this year, after its quarter-point boost yesterday, the Fed has signaled no imminent plan to lift its key rate from near zero amid weak expansion.

“The labor market is improving slowly,” Jenny Lin, senior U.S. economist at Ford Motor Co., said on a teleconference with analysts on July 1. “The economy is facing two temporary factors, which slowed growth -- the fuel price run-up and Japan impact. Both of these are reversing now and set the stage for some improved readings in the months ahead.”

Lack of faster progress in the labor market and in the economic recovery, which started in June 2009, has taken a toll on Obama’s approval ratings. Since he took office in January 2009, unemployment has increased by about a percentage point and the economy has lost 2.5 million jobs.

By a 44 percent to 34 percent margin, Americans say they believe they are worse off than when Obama took office, according to a Bloomberg National Poll conducted June 17-20.

--With assistance from Chris Middleton in Washington and Simon Kennedy in London. Editors: Vince Golle, Chris Wellisz

To contact the reporter on this story: Shobhana Chandra in Washington at

To contact the editor responsible for this story: Christopher Wellisz at

The Aging of Abercrombie & Fitch
blog comments powered by Disqus