Bloomberg News

Employment in U.S. Probably Rose, Keeping Jobless Rate Steady

February 03, 2012

Feb. 3 (Bloomberg) -- Employers probably increased payrolls in January, a sign companies are gaining confidence the U.S. expansion will weather Europe’s slump, economists said before a report today.

Employment grew by 140,000 after rising by 200,000 in December, according to the median forecast of 89 economists surveyed by Bloomberg News. The jobless rate may have held at an almost three-year low of 8.5 percent. Another report may show service industries expanded at a faster pace last month.

“The labor market continues to churn out new jobs at a respectable pace,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “We aren’t back to normal yet, but we are on our way.”

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 one reason the Federal Reserve last week said it will keep interest rates low for a longer period.

The Labor Department’s jobs report is due at 8:30 a.m. Payroll estimates in the Bloomberg survey ranged from increases of 95,000 to 225,000.

Transportation Jobs

The estimated gain in January payrolls is smaller than the prior month’s increase as economists, including Ellen Zentner at Nomura Securities International Inc. in New York, forecast a surge in hiring at transportation companies will be unwound. The Labor Department may have had trouble adjusting the data for swings in hiring and firing of roughly 40,000 workers temporarily employed during the holidays by delivery companies like United Parcel Service Inc. and FedEx Corp..

Private payrolls are forecast to rise by 160,000 in January, after a 212,000 gain the prior month, the biggest back- to-back increase since March-April, according to the survey median. Manufacturing payrolls are forecast to rise by 13,000 after a 23,000 gain.

Peoria, Illinois-based Caterpillar Inc., the world’s biggest maker of earthmoving equipment, plans to increase employment this year as it expands facilities, including in Victoria, Texas, and Winston-Salem, North Carolina, Chief Financial Officer Edward Rapp said yesterday.

“Those are the things that will lead to employment growth here,” Rapp said in an interview with Betty Liu on Bloomberg Television’s “In the Loop.”

Signs in recent months of an improving economy have helped drive up stock prices. The Standard & Poor’s 500 Index has climbed 17 percent since the end of the third quarter.

Fed’s View

High unemployment is one reason why the Fed on Jan. 25 said it would keep its benchmark lending rate low at least until late 2014 from a prior estimate of mid-2013.

“We still have a long way to go before the labor market can be said to be operating normally,” Fed Chairman Ben S. Bernanke told the House Budget Committee in Washington yesterday. “Fortunately, over the past few months, indicators of spending, production and job-market activity have shown some signs of improvement.”

With today’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.

It will also include changes to the figures used to adjust the data for seasonal swings which will affect numbers back to January 2007.

Revisions Included

In addition, the report will include methodology changes to the household survey, incorporating new population data from the decennial census, according to the Labor Department.

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.

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 at 10 a.m. will show the non-manufacturing index that tracks almost 90 percent of the economy rose to 53.2 this month, the highest since August, from 53 in December, according to the median forecast of economists surveyed. A reading greater than 50 signals growth.

A report from the Commerce Department at 10 a.m. may show factory orders increased 1.5 percent in December after a 1.8 percent gain the prior month, according to economists surveyed.

--With assistance from Ainhoa Goyeneche in Washington. Editors: Carlos Torres, Vince Golle

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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


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