Jan. 29 (Bloomberg) -- Employers probably added workers to payrolls in January, showing companies are gaining confidence the U.S. expansion will weather Europe’s slump, economists said before reports this week.
Employment grew by 150,000 after rising by 200,000 in December, according to the median forecast of 68 economists surveyed by Bloomberg News. The jobless rate may have held at an almost three-year low of 8.5 percent. Other reports may show manufacturing accelerated this month and consumer confidence picked up.
“The labor market is on firmer footing and manufacturing entered the year more upbeat,” said Ellen Zentner, a senior economist at Nomura International Securities LLC in New York. “Improvement in the labor market will go far in supporting the economic recovery in 2012.”
More hiring and larger wage gains are needed to ensure that consumer spending, which accounts for about 70 percent of the economy, strengthens after growing at the weakest pace of any post-World War II expansion. Concern that the jobless rate remains too high is among reasons the Federal Reserve last week said it will keep interest rates low for a longer period.
The Labor Department’s jobs report is due Feb. 3. Payroll estimates in the Bloomberg survey ranged from increases of 100,000 to 225,000. The jobless rate, which was 9.1 percent a year ago, is projected to hold at the lowest since early 2009.
The projected gain in January payrolls is smaller than the prior month’s increase as economists, including Zentner, forecast about 40,000 temporary holiday workers hired by delivery companies like United Parcel Service Inc. and FedEx Corp. were dismissed this month.
Private payrolls are forecast to rise by 168,000 in January, after a 212,000 gain the prior month, the biggest back- to-back gain since March-April, according to the survey median. Manufacturing payrolls are forecast to rise by 11,000 after a 23,000 gain.
Norfolk Southern Corp., the second-biggest railroad in the eastern U.S., said it plans to add to payrolls this year. The Norfolk, Virginia-based company said it will hire more engineers and mechanics, Chief Financial Officer James Squires said on a Jan. 24 conference call.
With this week’s jobs report, the government will issue its annual benchmark update, which aligns the data with corporate tax records and covers the period from April 2010 to March 2011. The Labor Department estimated in September that payrolls for the 12 months would be increased by 192,000.
The government last week reported the economy grew at a 2.8 percent annual pace in the fourth quarter after a 1.8 percent gain in the prior three months. The growth rate excluding a jump in inventories was 0.8 percent, the report showed.
Consumer spending rose at a 2 percent pace last quarter, less than the median forecast of economists surveyed. Household purchases climbed 2.2 percent in 2011 after an increase of 2 percent in 2010, the weakest two-year performance of any expansion since the end of World War II.
A report from the Institute for Supply Management on Feb. 1 will show its factory index rose to 54.5 this month, the highest since June, from 53.9 in December. Two days later, a report from the Commerce Department may show factory orders increased 1.5 percent in December after a 1.8 percent gain the prior month, according to the estimates of economists surveyed.
Another survey from the Tempe, Arizona-based ISM on Feb. 3 may show a gauge of non-manufacturing companies, which make up almost 90 percent of the economy, rose to 53.2 this month, the highest since August, from 52.6 in December, according to economists’ estimates. For both the ISM gauges, measures greater than 50 signal growth.
Consumer confidence has also picked up. The Conference Board’s sentiment index rose to 68 in January from 64.5 the prior month, according to economists’ estimates before the Jan. 31 report. That would be the highest level since February.
Consumer purchases rose 0.1 percent in December for a third consecutive month, economists estimated the Commerce Department will report tomorrow. Incomes rose 0.4 percent after a 0.1 percent gain in November, the survey showed.
Home prices continue to fall as housing remains a weak link in the recovery. The S&P Case-Shiller index of prices in 20 cities fell 3.3 percent in November from a year earlier, compared with a 3.4 percent decline in the 12 months ended in October, economists forecast the group will say on Jan. 31.
--With assistance from Chris Middleton in Washington. Editors: Carlos Torres, Vince Golle
To contact the reporter on this story: Bob Willis in Washington at email@example.com
To contact the editor responsible for this story: Christopher Wellisz in Washington at firstname.lastname@example.org