The job market in the U.S. probably kept making headway in January even in the face of Washington’s budget battles, economists said before reports this week.
Employers added 160,000 workers to payrolls in January after a 155,000 December increase, according to the median of 67 forecast in a Bloomberg survey before a Feb. 1 Labor Department report. The average monthly gain over the past two years was 153,000. Other data this week may show manufacturing is stabilizing, housing is improving and consumers are spending.
Sustained gains in hiring are giving incomes a lift, cushioning workers from the sting of higher payroll taxes. Nonetheless, bigger employment increases are needed to drive down a jobless rate that Federal Reserve officials, who meet this week for the first time this year, say is too high.
“The labor market is pretty resilient, but it’s also unspectacular,” said Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut. “It looks like employers didn’t really blink during the fiscal debates. If we keep adding jobs at this pace, the unemployment rate will gradually come down.”
The jobless rate, derived from a separate survey of households, was probably 7.8 percent, matching December and November as the lowest since the beginning of 2009, according to the median forecast.
With the January report, the government will also issue its annual benchmark update, which aligns the data with government tax records covering the period from April 2011 to March 2012. The Labor Department has already estimated the revisions will show payrolls in the period up another 386,000 workers from the current estimate of 1.94 million.
It will also include changes to the figures used to adjust the data for seasonal swings, affecting numbers back to January 2008. Additionally, the report will incorporate new population estimates from the Census Bureau into the household survey that is used to calculate the jobless rate.
In the past year, stable job growth has helped reduce unemployment, enabling consumer spending, about 70 percent of the economy, to advance. Analysts forecast a Jan. 31 report from the Commerce Department will show household purchases rose 0.3 percent last month after increasing 0.4 percent in November. The same report may also show incomes climbed 0.8 percent, the most in a year, partly the result of firms pulling dividends forward to avoid higher taxes in 2013.
Rising household purchases failed to fully offset weak overseas demand and smaller gains inventories in the fourth quarter. The nation’s gross domestic product advanced at a 1.2 percent rate in the fourth quarter, the weakest in almost two years, economists estimate before Jan. 30 figures from the Commerce Department.
Manufacturing shows signs of emerging from a lull that began in the middle of last year. Economists estimate a Commerce Department report will show durable goods orders climbed in December. A Feb. 1 report from the Institute for Supply Management will show factories expanded for a second month in January, according to the survey median.
Investors are encouraged by the outlook. The Standard & Poor’s Supercomposite Machinery index, which includes companies such as Deere & Co., has climbed 11 percent since the end of November, outpacing a 6.1 percent gain in the broader S&P 500 gauge over the same period.
Fiscal policy may be standing in the way of faster economic growth. Congress on Jan. 1 allowed payroll taxes to revert to 6.2 percent from 4.2 percent and boosted the levy on top income earners. Lawmakers are now battling over spending reductions scheduled for March 1 that would further reduce growth.
Meantime, the housing market represents a bright spot for the economy. Home prices increased 5.5 percent in the 12 months through November, the most since 2006, economists project a Jan. 29 report from S&P/Case-Shiller will show.
Strength in housing will help fuel labor market gains. Lowe’s Cos., the second-largest U.S. home-improvement retailer, said on Jan. 22 that it plans to hire 45,000 seasonal workers, 13 percent more than last year. In addition, the Mooresville, North Carolina-based company said it will take on 9,000 permanent workers as the housing rebound spurs remodeling.
The Federal Open Market Committee, which will release a statement on monetary policy at the conclusion of a two-day meeting on Jan. 30, says it wants to spur a stronger expansion. In its statement last month, the FOMC said it will keep rates near zero as long as the jobless rate is above 6.5 percent and inflation is forecast to be 2.5 percent or less. Previously policy makers said they would keep interest rates low through at least mid-2015.
The central bank’s chairman, Ben S. Bernanke, said Jan. 14 that the level of unemployment “is not an acceptable situation,” especially when 39 percent of the jobless haven’t worked for six months or longer.
Bloomberg Survey =============================================================== Release Period Prior Median Indicator Date Value Forecast =============================================================== Durables Orders MOM% 1/28 Dec. 0.8% 2.0% Durables Ex-Trans MOM% 1/28 Dec. 1.6% 0.8% Cap Goods Core MOM% 1/28 Dec. 2.6% -1.0% Cap Goods Core Ship MOM 1/28 Dec. 2.0% 0.5% Pending Homes MOM% 1/28 Dec. 1.7% 0.1% Pending Homes YOY% 1/28 Dec. 8.9% 12.5% Case Shiller Monthly MO 1/29 Nov. 0.7% 0.7% Case Shiller Monthly YO 1/29 Nov. 4.3% 5.5% Consumer Conf Index 1/29 Jan. 65.1 64.0 ADP Payroll ,000’s 1/30 Jan. 215 165 GDP Annual QOQ% 1/30 4Q A 3.1% 1.2% Personal Consump. QOQ% 1/30 4Q A 1.6% 2.1% GDP Prices QOQ% 1/30 4Q A 2.7% 1.5% Core PCE Prices QOQ% 1/30 4Q A 1.1% 1.0% Pers Inc MOM% 1/31 Dec. 0.6% 0.8% Pers Spend MOM% 1/31 Dec. 0.4% 0.3% PCE Deflator MOM% 1/31 Dec. -0.2% 0.0% PCE Deflator YOY% 1/31 Dec. 1.4% 1.4% Core PCE Prices MOM% 1/31 Dec. 0.0% 0.1% Core PCE Prices YOY% 1/31 Dec. 1.5% 1.4% Employ Costs QOQ% 1/31 4Q 0.4% 0.5% Initial Claims ,000’s 1/31 26-Jan 330 350 Cont. Claims ,000’s 1/31 19-Jan 3157 3171 Chicago PM Index 1/31 Jan. 48.9 50.5 Nonfarm Payrolls ,000’s 2/1 Jan. 155 160 Private Payrolls ,000’s 2/1 Jan. 168 164 Manu Payrolls ,000’s 2/1 Jan. 25 10 Unemploy Rate % 2/1 Jan. 7.8% 7.8% Hourly Earnings MOM% 2/1 Jan. 0.3% 0.2% Hourly Earnings YOY% 2/1 Jan. 2.1% 2.1% Avg Weekly Hours 2/1 Jan. 34.5 34.5 Markit Manu. PMI 2/1 Jan. F 56.1 56.0 U of Mich Conf. Index 2/1 Jan. F 71.3 71.5 ISM Manu Index 2/1 Jan. 50.7 50.5 ISM Prices Index 2/1 Jan. 55.5 56.0 Construct Spending MOM% 2/1 Dec. -0.3% 0.6% Vehicle Sales Mlns 2/1 Jan. 15.3 15.2 Domestic Vehicles Mlns 2/1 Jan. 12.0 12.0 ==============================================================
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