Bloomberg News

June U.S. Payroll Gain Probably Capped Worst Quarter Since 2010

July 06, 2012

Payrolls in U.S. Rose 80,000 in June; Jobless Rate at 8.2%

Job seekers wait to speak to recruiters at the "Putting America Back To Work!" job fair in New York. Photographer: Victor J. Blue/Bloomberg

June’s payroll count probably rounded out the weakest quarter for U.S. employment in more than two years, economists said before a government report today.

Employers increased staffing by 100,000 workers last month after adding 69,000 in May, the least in a year, according to the median forecast of 84 economists surveyed by Bloomberg News. Company headcounts excluding government agencies may have climbed by 106,000, concluding the smallest quarterly advance since the first three months of 2010.

The estimates, albeit improvements from May, offer further evidence that hiring has shifted into a lower gear, restricting consumers’ ability to boost spending. The report may also show the jobless rate held at 8.2 percent last month, underscoring concern by some Federal Reserve policy makers that the economy isn’t growing enough to reduce unemployment.

“The labor market is struggling but healing,” said Bill Cheney, chief economist at John Hancock Financial Services Inc. in Boston. “Until we start getting job creation reliably in the 250,000 range, I will still feel like the labor market is fragile.”

The Labor Department will release the employment report at 8:30 a.m. in Washington. Forecasts for total payroll growth ranged from increases of 35,000 to 165,000.

Estimates for the unemployment rate, derived from a separate Labor Department survey of households, ranged from 8.1 percent to 8.3 percent. Joblessness has exceeded 8 percent since February 2009, the longest stretch in monthly records dating to 1948.

Modest Incomes

“What we are seeing today from an income perspective is our economy is modestly adding jobs,” Robert Hull, chief financial officer at Lowe’s Cos., the second-largest U.S. home- improvement retailer, said at a June 26 consumer conference in Boston. “That’s the good news. The bad news is it’s not sufficient to have a material impact on the unemployment rate.”

The economic and jobs outlook will probably play a major role in President Barack Obama’s bid for re-election. Obama ascribed labor market weakness in May primarily to an inadequate response by European governments to the continent’s debt crisis, saying “our biggest challenge is not here in the U.S. but the economy overseas.” Republican candidate Mitt Romney said Obama “is always quick to find someone to blame” for the weak economy.

The slowdown in both economic and employment growth prompted the Fed to take additional steps to stimulate the expansion last month. Officials said on June 20 they would buy securities to extend the maturities of assets on the bank’s balance sheet, thereby holding down longer-term interest rates.

Fed Forecasts

The central bankers also lifted forecasts for joblessness, saying they anticipate the unemployment rate will average 8 percent to 8.2 percent in the fourth quarter of this year versus an April estimate of 7.8 percent to 8 percent.

“After a brighter start to the year, economic momentum has slowed in the last few months,” Federal Reserve Bank of New York President William C. Dudley said during a June 29 speech.

Repeating language the policy makers used when announcing the new measures, Dudley said the Fed is “prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions.” The crisis in Europe and uncertainty over U.S. fiscal policy remain potential hurdles for business investment, he said.

Investors last month took heart that some progress was being made across the Atlantic. Stocks surged on June 29, capping the biggest June gain since 1999, after European leaders reached an agreement that alleviated concern banks will fail. The Standard & Poor’s 500 Index (SPX) climbed 4 percent last month.

At the same time, uncertainty about the government’s fiscal outlook may still be hampering hiring plans. Congress has yet to resolve the so-called fiscal cliff, which represents more than $600 billion in higher taxes and reductions in defense spending and other government programs in 2013 that will take place without action.

                       Bloomberg Survey
================================================================
                           Nonfarm  Private     Manu Unemploy
                          Payrolls Payrolls Payrolls     Rate
                            ,000’s   ,000’s   ,000’s        %
================================================================
Date of Release              07/06    07/06    07/06    07/06
Observation Period            June     June     June     June
----------------------------------------------------------------
Median                         100      106        8     8.2%
Average                         97      109        8     8.2%
High Forecast                  165      175       17     8.3%
Low Forecast                    35       45       -3     8.1%
Number of Participants          84       43       21       80
Previous                        69       82       12     8.2%
----------------------------------------------------------------
4CAST                           80       95     ---      8.3%
ABN Amro                        90      100     ---      8.2%
Action Economics               100      105        5     8.2%
Aletti Gestielle               115     ---      ---      8.2%
Ameriprise Financial            80       87        4     8.2%
Bank of Tokyo-Mitsubishi       120      130     ---      8.2%
Bantleon Bank AG                90     ---      ---      8.2%
Barclays                        75       85     ---      8.2%
Bayerische Landesbank          125     ---      ---      8.1%
BBVA                            90      100        8     8.2%
BMO Capital Markets             80     ---      ---      8.2%
BNP Paribas                     85     ---      ---      8.2%
BofA Merrill Lynch             100      110     ---      8.2%
Briefing.com                   100      110     ---      8.1%
Capital Economics              125     ---      ---      8.1%
CIBC World Markets             110     ---      ---      8.2%
Citi                           110      120       15     8.2%
ClearView Economics             90      100        0     8.3%
Comerica                       110     ---      ---      8.2%
Commerzbank AG                  80     ---      ---      8.2%
Credit Agricole CIB            100     ---      ---      8.2%
Credit Suisse                  100      110     ---      8.2%
Daiwa Securities America       135     ---      ---      8.2%
Danske Bank                     80       90     ---      8.2%
DekaBank                        95     ---      ---      8.2%
Desjardins Group                85     ---      ---      8.2%
Deutsche Bank Securities        75       90     ---      8.2%
Deutsche Postbank AG            80     ---      ---      8.2%
Exane                           60     ---      ---      8.2%
First Trust Advisors           120      130        4     8.2%
FTN Financial                   80       90     ---      8.2%
Goldman, Sachs & Co.           125     ---      ---      8.2%
Helaba                         100     ---      ---      8.2%
High Frequency Economics       150     ---      ---      8.2%
HSBC Markets                   115      127        7     8.2%
Hugh Johnson Advisors           88      106       10     8.2%
IDEAglobal                     115      130       15     8.2%
IHS Global Insight              75     ---      ---      8.2%
Informa Global Markets          65     ---        -3     8.2%
ING Financial Markets          125      140       10     8.2%
Insight Economics              100     ---      ---      8.2%
Intesa Sanpaulo                 90     ---      ---      8.2%
Iur Capital                     45     ---      ---      8.2%
J.P. Morgan Chase               85     ---      ---      8.3%
Janney Montgomery Scott         70       85        8     8.2%
Jefferies & Co.                 95       99       15     8.2%
JH Cohn                         50     ---      ---      ---
John Hancock Financial         127     ---      ---      8.2%
Landesbank Berlin               50     ---      ---      8.1%
Landesbank BW                  100     ---      ---      8.2%
LCA Consultores                140     ---      ---      ---
Maria Fiorini Ramirez           85       95     ---      ---
Market Securities              102     ---      ---      8.2%
MET Capital Advisors            72     ---      ---      8.2%
Modal Asset                   ---       132     ---      ---
Moody’s Analytics              125      130       10     8.2%
Morgan Stanley & Co.           110      120       15     8.2%
National Bank Financial         80     ---      ---      8.2%
Natixis                         85     ---      ---      8.2%
Nomura Securities               80       90        5     8.2%
Nord/LB                        100     ---        10     8.2%
OSK Group/DMG                   90     ---      ---      8.2%
Paragon Research               110     ---      ---      8.2%
Pierpont Securities            110      125     ---      8.2%
PineBridge Investments         115     ---      ---      8.2%
PNC Bank                       135      145        5     8.2%
Prestige Economics              35       45     ---      8.1%
Raiffeisenbank International   140      150     ---      8.2%
Raymond James                  100      115     ---      8.2%
RBC Capital Markets             75       85     ---      8.2%
RBS Securities                 110      120     ---      8.2%
Renaissance Macro Research     105      115     ---      8.2%
Scotiabank                      75     ---      ---      8.2%
SMBC Nikko Securities          100      100     ---      8.2%
Societe Generale                80       90     ---      8.1%
Southern Polytechnic State     120     ---      ---      ---
Standard Chartered              85       95     ---      8.2%
Stone & McCarthy Research      165      175       17     8.1%
TD Securities                  100      110        0     8.3%
UBS                             85      100     ---      8.2%
UniCredit Research             100     ---      ---      8.2%
University of Maryland          81       89        5     8.3%
Wells Fargo & Co.              106     ---      ---      8.3%
Westpac Banking Co.            130     ---      ---      8.2%
Wrightson ICAP                 100      110     ---      8.2%
================================================================

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

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


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