Bloomberg News

Employment Probably Picked Up in December: U.S. Economy Preview

January 06, 2012

Jan. 1 (Bloomberg) -- Hiring probably accelerated in December for a second month, a sign an improving U.S. labor market will bolster consumer spending in early 2012, economists said before a report this week.

Payrolls climbed by 150,000 workers after rising 120,000 in November, according to the median forecast of 62 economists in a Bloomberg News survey before Labor Department data on Jan. 6. The unemployment rate rose last month after reaching the lowest level in more than two years, the report may also show.

More jobs are needed to sustain the rebound in confidence that has propelled household purchases, which account for about 70 percent of the world’s largest economy. At the same time, the financial crisis in Europe and political gridlock in the U.S. may be inhibiting even bigger employment gains, indicating a prolonged drop in joblessness will take time to emerge.

“We continue to make steady progress,” said Jonathan Basile, an economist at Credit Suisse in New York. “There’s still a very high level of unemployment despite the improvement that we’re seeing. There’s still a long way to go.”

The jobless rate increased to 8.7 percent in December from 8.6 percent the prior month, the lowest since March 2009, according to the median forecast of economists surveyed.

Employers added 1.45 million workers last year through November, bringing job losses since the recession started in December 2007 to 6.28 million, according to Labor Department figures. The projected gain in payrolls would bring the average for July through December to 135,000, compared with 131,000 in the first six months of the year.

Private Payrolls

The employment report may also show private employment, which excludes government jobs, climbed 170,000 after a 140,000 gain in November.

“Sales are robust, merchandise margins are strong, operating margins are growing,” Alexander Smith, chief executive officer of Fort Worth, Texas-based Pier 1 Imports Inc., said on a Dec. 15 conference call with analysts. “There’s going to be a little more hiring in the first part of the year without a doubt.”

Shares rose in the last quarter of 2011 as the economy showed signs of weathering the European debt crisis. The Standard & Poor’s 500 Index increased 11 percent over the past three months. For all of last year, the gauge was little changed.

Bigger job gains than those generated in 2011 may be needed to reduce unemployment. The jobless rate has exceeded 8.5 percent since March 2009, the longest stretch of such levels since monthly records began in 1948.

Jobless Rate ‘Elevated’

That’s one reason policy makers remain concerned. “While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated,” Federal Reserve Chairman Ben S. Bernanke and other members of the Federal Open Market Committee said in a statement at the conclusion of a meeting last month in Washington.

Other reports this week may show manufacturing and construction picked up, economists said.

The Institute for Supply Management’s factory index climbed to a six-month high of 53.4 in December, economists surveyed by Bloomberg projected ahead of a Jan. 3 report. Readings above 50 indicate expansion.

A Jan. 5 report from the same group will show service industries expanded in December at the fastest pace in three months. The ISM’s non-manufacturing index climbed to 53 from 52 in November, according to the survey median.

Factory Orders

American manufacturers also saw orders increase nearing the end of 2011. Bookings for factory goods climbed 2 percent in November, according to economists surveyed before a Jan. 4 report from the Commerce Department.

Spending on construction projects advanced 0.4 percent in November amid signs of improvement in the housing market, economists said ahead of Jan. 3 figures from the Commerce Department. That would be the fourth straight monthly gain, matching the longest streak since late 2010.

--With assistance from Kristy Scheuble in Washington. Editors: Carlos Torres, Vince Golle

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz in Washington at cwellisz@bloomberg.net


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus