Employers probably increased staff in June at almost the same pace as in the prior month amid growing confidence the U.S. economy will overcome fiscal and global headwinds.
Payrolls grew by 165,000 workers after rising by 175,000 in May, according to the median forecast of 87 economists in a Bloomberg survey. The report may also show the unemployment rate fell to 7.5 percent, matching April’s four-year low, from May’s 7.6 percent, according to the survey.
Job gains and a rebound in housing are shoring up Americans’ finances and boosting expectations that the economy will gain momentum even after the payroll tax increased and government agencies began to cut spending. Federal Reserve policy makers have said they’ll start to trim bond purchases before the end of the year as unemployment falls.
“The job market is one of the brighter parts of the economy,” said Ethan Harris, co-head of global economics research at Bank of America Corp. in New York. “We’ve been surprised at how strong payrolls have been in relation to the overall economy.”
The Labor Department is scheduled to release the data at 8:30 a.m. in New York. Estimates for the change in payrolls in the Bloomberg survey ranged from gains of 77,000 to 220,000.
Other measures of the labor market have pointed to gains even as widespread economic progress remains elusive.
Service providers hired more workers last month even after placing orders at a slower pace, the Institute for Supply Management reported this week. A measure of hiring climbed to a four-month high last month, while the overall gauge dropped to its lowest reading since February 2010.
That report contrasted with an ISM reading two days earlier that showed a measure of factory employment dropped in June to its lowest since September 2009.
Figures from ADP Research Institute in Roseland, New Jersey, showed private employers added 188,000 workers last month following a 134,000 gain in May.
Automakers are among standouts in the recovery, enjoying gains in sales fueled by improved confidence and cheap credit. New cars and trucks sold in June at the fastest pace since 2007 as American drivers replaced aging vehicles and a rebound in housing construction moved trucks off dealer lots.
The industry sales rate surged to a 15.9 million annualized pace, exceeding the 15.5 million median estimate of economists surveyed by Bloomberg and benefiting companies such as Ford Motor Co. (F) and General Motors Co. (GM) That’s the best monthly pace since 16.1 million in November 2007 and compares to 14.3 million a year earlier, according to data from Ward’s Automotive Group.
Toyota Motor Corp. (TM), the world’s largest carmaker, raised deliveries 9.8 percent last month from the same time last year, topping a projected 6.2 percent gain. It was the company’s best June performance in six years, said Bill Fay, group vice president of U.S. Toyota sales.
“Economic fundamentals remain very strong,” Fay said on a July 2 earnings call. “There really doesn’t appear to be a let up in pent-up demand.”
Household purchases, which account for about 70 percent of the economy, rebounded in May, recovering from a decline in April, as incomes advanced 0.5 percent, according to figures from the Commerce Department. New-home sales reached an almost five-year high in May, the Commerce Department reported last week.
The recovery continues to struggle against crosscurrents. Americans are feeling the effects of a two percentage-point increase in the payroll tax that took effect in January and growth is being buffeted by weakness overseas and federal spending cuts that began in March.
Financial markets also remain fragile after Fed Chairman Ben S. Bernanke said the central bank could start reducing its $85 billion in monthly bond purchases later this year and end the program in mid-2014. Bernanke said last month he expects the jobless rate to be around 7 percent when the Fed stops buying bonds.
From June 18, the day before Bernanke’s announcement, to June 24, the Standard & Poor’s 500 Index dropped 4.8 percent. It has since regained some of that lost ground, 2.7 percent to close at 1,615.41 July 3. The markets were closed yesterday for the U.S. independence celebration.
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