U.S. Hiring Probably Picked Up in May; Jobless Rate Unchanged
By Joe Richter
June 1 (Bloomberg) -- Employers in the U.S. increased hiring last month, signaling the economy is rebounding from the weakest growth in four years.
The projected 134,000 increase in payrolls is based on the median estimate of 84 economists surveyed by Bloomberg News and would follow a 88,000 gain in April that was the smallest since November 2004. The jobless rate is forecast to hold at 4.5 percent for a second month.
More jobs and bigger paychecks are crucial to sustaining consumer spending, which accounts for more than two-thirds of the economy, as house values stagnate and gasoline prices climb. Federal Reserve officials will not cut interest rates as long as the jobless rate stays low, economists said.
``A solid labor market is helping maintain the consumer side of the economy,'' said John Shin, an economist at Lehman Brothers Holdings Inc. in New York. ``That also feeds inflation concerns for the Fed, and I think they will stay on the sidelines for the rest of the year.''
The Labor Department is due to issue the report at 8:30 a.m. in Washington. The payroll estimates ranged from gains of 45,000 to 224,000. The economy has added about 129,000 jobs a month this year, down from 189,000 in 2006.
Other reports today are forecast to support the view that wages are critical to consumer demand. The Commerce Department is forecast to report that personal spending rose 0.4 percent in April as incomes increased 0.3 percent, according to the median estimates of economists surveyed.
Manufacturing Rebound
A report at 10 a.m. from the Institute for Supply Management may show factories expanded last month at about the same pace as in April, evidence a rebound in manufacturing is taking hold. The Tempe, Arizona group's index is projected to slip to 54 from a reading of 54.7 in April that was the highest in almost a year.
Forecasts for the unemployment rate ranged from 4.4 percent to 4.6 percent. Because fewer people are entering the labor force than in previous years, smaller payroll gains are needed to keep the rate stable, economists said.
The unemployment rate has ranged between 4.4 percent, a five-year low, and 4.6 percent since September.
Fed policy makers said last month that the job market was still ``relatively tight,'' according to minutes of their May 9 meeting, released this week. Wage growth still posed a `significant'' risk to inflation, the Fed said.
Today's report is forecast to show hourly wages rose 0.3 percent after a 0.2 percent gain in April, according to the Bloomberg survey. Hourly earnings were probably up 3.9 percent in the 12 months ended in May, compared with a 3.7 percent year- over-year increase the prior month.
Private Survey
Private payrolls rose by 97,000 in May, according to a projection this week based on data from ADP Employer Services. The increase followed a gain of 61,000 in April.
Service industries posted increases in employment, while manufacturers and construction companies continued to shed jobs, the report showed.
``The losses in manufacturing and construction probably aren't over yet,'' Joel Prakken, chairman of Macroeconomic Advisers LLC, said in an interview. Macroeconomic Advisers in St. Louis produces the report jointly with ADP. But, ``things aren't getting worse,'' said Prakken.
The Labor Department report will probably confirm job losses in homebuilding and manufacturing, economists said.
Factories may have cut 15,000 jobs last month after shedding 19,000 positions in April, based on the Bloomberg survey median. Manufacturing job losses have averaged about 14,000 so far this year, more than twice as much as in 2006.
Profits Slow
Smaller gains in profits suggest payrolls are unlikely to accelerate much more, economists said.
Armonk, New York-based International Business Machines Corp., the world's largest computer-services company, announced on May 30 that it cut about 1,570 jobs, mainly in its technology services unit. The company had previously fired 1,315 workers in the global-services unit.
There are also signs that the labor market may not have been as strong last year as earlier estimates suggested.
A report this month from the Labor Department, based on tax records from all businesses, showed the economy added 19,000 private-sector jobs in the third quarter. That contrasts with the government's monthly payrolls figures, based on a smaller survey, which showed a gain of 498,000 jobs for the period.
The report showed declines in residential-construction jobs, and more losses may follow in coming months, economists said. Construction jobs fell by 11,000 in April, the government said last month.
The Commerce Department said yesterday that the economy expanded at an annual rate of 0.6 percent from January through March, the weakest pace in more than four years and down from a 1.3 percent estimate issued on April 27.
A resilient labor market and signs that business spending is recovering from a slump last year point to gradual improvement in growth, economists said
The economy will probably expand at a 2.2 percent pace this quarter, and at a 2.8 percent rate by year-end, according to a economists surveyed by Bloomberg April 30 to May 8. Bloomberg Survey
FIRM Personal Nonfarm Unemploy ISM
Spending Payroll Rate Manu.
----------------------------------------------------------
Number of replies 72 84 81 78
MEDIAN 0.4% 134 4.5% 54.0
AVERAGE 0.4% 133 4.5% 53.8
High Forecast 0.8% 224 4.6% 56.1
Low Forecast 0.0% 45 4.4% 51.0
Previous 0.3% 88 4.5% 54.7
----------------------------------------------------------
4CAST Ltd. 0.3% 165 4.4% 55.0
Action Economics 0.4% 135 4.5% 53.0
AIG Global Invest. 0.6% 126 4.5% 55.2
Alleti Gestielle SGR 0.3% 100 4.5% 54.7
Allianz Dresdner n/a 100 4.5% 53.5
Argus Research 0.3% 45 4.4% 54.5
BBVA 0.4% 130 4.5% 55.2
BMO Capital Markets 0.3% 133 4.5% 53.7
BNP Paribas 0.2% 98 4.5% 53.2
B of A Securities 0.4% 100 4.5% 53.5
Banca IMI n/a 100 4.5% 53.4
Bancolombia SA n/a 180 n/a n/a
Banco Itau Europa n/a 130 4.5% 53.5
Bantleon Bank AG 0.3% 95 4.5% 52.0
Barclays Capital 0.4% 165 4.4% 54.0
Bayerische Landes. n/a 140 4.5% 53.5
Bear Stearns 0.5% 175 4.4% 54.5
BOT- Mitsubishi 0.6% 140 4.5% 53.7
Briefing.com 0.3% 130 4.5% 53.5
Calyon 0.3% 120 4.5% 54.0
CFC Group 0.3% 135 4.5% 55.0
CIBC World Markets 0.4% 170 4.5% 55.0
Citigroup 0.7% 140 4.5% 53.0
ClearView Economics 0.4% 125 4.6% 55.0
Commerzbank 0.3% 170 4.6% 52.0
Countrywide SEC 0.4% 100 4.5% 53.5
Credit Suisse 0.4% 150 4.5% 54.5
Daiwa Securities 0.4% 135 4.5% 54.5
Danske Bank 0.5% 175 4.5% 53.2
DekaBank 0.4% 160 4.5% 54.5
Desjardins Group 0.5% 125 4.5% 53.0
Deutsche Bank 0.4% 70 4.5% 53.0
Deutsche PostBank 0.2% 120 4.5% 53.7
Dresdner Kleinwort 0.2% 110 4.5% 52.0
DZ Bank 0.2% 120 4.5% 54.0
Essen Hyp. n/a 100 n/a n/a
FTN Financial 0.4% 175 4.5% 53.5
First Trust Advisors 0.4% 130 4.4% 54.5
Fortis 0.3% 170 4.4% 54.5
Global Insight 0.4% 160 4.5% 52.5
Goldman Sachs 0.3% 150 4.5% 54.0
H&R Block Financial 0.4% 120 4.5% 53.5
HBOS Treasury 0.8% 150 4.6% 52.0
HSH Nordbank AG n/a 110 4.6% n/a
Horizon Investments n/a 115 4.5% 52.0
IDEAglobal 0.0% 160 4.5% 54.0
ING Barings 0.4% 130 4.5% 52.0
Informa Global n/a 110 4.5% n/a
Insight Economics 0.4% 150 4.5% 53.5
Intesa-SanPaulo 0.4% 140 4.5% 53.7
J.P. Morgan Chase 0.5% 150 4.5% 54.0
JPMorgan Private 0.3% 150 4.5% 53.0
Landesbank BW 0.2% 100 4.6% 53.5
Lehman 0.4% 150 4.5% 54.0
Lloyds TSB 0.4% 150 4.5% 55.5
Maria Fiorini 0.4% 125 4.5% 54.0
Merrill Lynch 0.4% 115 4.5% 55.0
MFC Global Invest. 0.2% 100 4.5% 53.0
Mizuho Securities 0.1% 180 4.5% 55.5
Moody's Economy.com 0.3% 110 4.5% 54.0
Morgan Stanley 0.5% 175 4.5% 55.0
National Bank Fin. 0.2% 115 4.5% 53.0
National City Bank 0.4% 224 4.4% 56.1
Natixis 0.4% 125 4.5% 52.4
Nomura 0.3% 135 4.5% 51.0
Nord/LB 0.3% 120 4.5% 54.0
PNC Bank 0.5% 120 4.5% 53.5
RBS Greenwich Cap. 0.4% 145 4.5% 53.5
Regions Financial n/a 125 4.5% n/a
Ried, Thunberg n/a 140 4.5% 54.0
Scotia Capital 0.3% 115 4.5% 55.0
Societe Generale 0.3% 150 4.4% n/a
Stone & McCarthy 0.3% 60 4.5% 51.7
TD Securities 0.3% 160 n/a 54.0
Thomson/IFR 0.6% 145 4.4% 54.0
TD Securities 0.4% 150 4.5% 54.8
Tullett Prebon 0.5% 150 4.5% 54.0
Ulpia 0.2% 120 4.5% 55.5
Unigest 0.4% 115 4.5% 54.7
Univ. of MD 0.5% 180 4.5% 54.1
Wachovia n/a 145 4.5% 53.0
Wells Fargo 0.3% 100 4.5% 54.0
WestLB AG 0.2% 135 4.5% 54.0
Westpac Banking 0.5% 150 4.4% 54.0
By Joe Richter
June 1 (Bloomberg) -- Employers in the U.S. increased hiring last month, signaling the economy is rebounding from the weakest growth in four years.
The projected 134,000 increase in payrolls is based on the median estimate of 84 economists surveyed by Bloomberg News and would follow a 88,000 gain in April that was the smallest since November 2004. The jobless rate is forecast to hold at 4.5 percent for a second month.
More jobs and bigger paychecks are crucial to sustaining consumer spending, which accounts for more than two-thirds of the economy, as house values stagnate and gasoline prices climb. Federal Reserve officials will not cut interest rates as long as the jobless rate stays low, economists said.
``A solid labor market is helping maintain the consumer side of the economy,'' said John Shin, an economist at Lehman Brothers Holdings Inc. in New York. ``That also feeds inflation concerns for the Fed, and I think they will stay on the sidelines for the rest of the year.''
The Labor Department is due to issue the report at 8:30 a.m. in Washington. The payroll estimates ranged from gains of 45,000 to 224,000. The economy has added about 129,000 jobs a month this year, down from 189,000 in 2006.
Other reports today are forecast to support the view that wages are critical to consumer demand. The Commerce Department is forecast to report that personal spending rose 0.4 percent in April as incomes increased 0.3 percent, according to the median estimates of economists surveyed.
Manufacturing Rebound
A report at 10 a.m. from the Institute for Supply Management may show factories expanded last month at about the same pace as in April, evidence a rebound in manufacturing is taking hold. The Tempe, Arizona group's index is projected to slip to 54 from a reading of 54.7 in April that was the highest in almost a year.
Forecasts for the unemployment rate ranged from 4.4 percent to 4.6 percent. Because fewer people are entering the labor force than in previous years, smaller payroll gains are needed to keep the rate stable, economists said.
The unemployment rate has ranged between 4.4 percent, a five-year low, and 4.6 percent since September.
Fed policy makers said last month that the job market was still ``relatively tight,'' according to minutes of their May 9 meeting, released this week. Wage growth still posed a `significant'' risk to inflation, the Fed said.
Today's report is forecast to show hourly wages rose 0.3 percent after a 0.2 percent gain in April, according to the Bloomberg survey. Hourly earnings were probably up 3.9 percent in the 12 months ended in May, compared with a 3.7 percent year- over-year increase the prior month.
Private Survey
Private payrolls rose by 97,000 in May, according to a projection this week based on data from ADP Employer Services. The increase followed a gain of 61,000 in April.
Service industries posted increases in employment, while manufacturers and construction companies continued to shed jobs, the report showed.
``The losses in manufacturing and construction probably aren't over yet,'' Joel Prakken, chairman of Macroeconomic Advisers LLC, said in an interview. Macroeconomic Advisers in St. Louis produces the report jointly with ADP. But, ``things aren't getting worse,'' said Prakken.
The Labor Department report will probably confirm job losses in homebuilding and manufacturing, economists said.
Factories may have cut 15,000 jobs last month after shedding 19,000 positions in April, based on the Bloomberg survey median. Manufacturing job losses have averaged about 14,000 so far this year, more than twice as much as in 2006.
Profits Slow
Smaller gains in profits suggest payrolls are unlikely to accelerate much more, economists said.
Armonk, New York-based International Business Machines Corp., the world's largest computer-services company, announced on May 30 that it cut about 1,570 jobs, mainly in its technology services unit. The company had previously fired 1,315 workers in the global-services unit.
There are also signs that the labor market may not have been as strong last year as earlier estimates suggested.
A report this month from the Labor Department, based on tax records from all businesses, showed the economy added 19,000 private-sector jobs in the third quarter. That contrasts with the government's monthly payrolls figures, based on a smaller survey, which showed a gain of 498,000 jobs for the period.
The report showed declines in residential-construction jobs, and more losses may follow in coming months, economists said. Construction jobs fell by 11,000 in April, the government said last month.
The Commerce Department said yesterday that the economy expanded at an annual rate of 0.6 percent from January through March, the weakest pace in more than four years and down from a 1.3 percent estimate issued on April 27.
A resilient labor market and signs that business spending is recovering from a slump last year point to gradual improvement in growth, economists said
The economy will probably expand at a 2.2 percent pace this quarter, and at a 2.8 percent rate by year-end, according to a economists surveyed by Bloomberg April 30 to May 8. Bloomberg Survey
FIRM Personal Nonfarm Unemploy ISM
Spending Payroll Rate Manu.
----------------------------------------------------------
Number of replies 72 84 81 78
MEDIAN 0.4% 134 4.5% 54.0
AVERAGE 0.4% 133 4.5% 53.8
High Forecast 0.8% 224 4.6% 56.1
Low Forecast 0.0% 45 4.4% 51.0
Previous 0.3% 88 4.5% 54.7
----------------------------------------------------------
4CAST Ltd. 0.3% 165 4.4% 55.0
Action Economics 0.4% 135 4.5% 53.0
AIG Global Invest. 0.6% 126 4.5% 55.2
Alleti Gestielle SGR 0.3% 100 4.5% 54.7
Allianz Dresdner n/a 100 4.5% 53.5
Argus Research 0.3% 45 4.4% 54.5
BBVA 0.4% 130 4.5% 55.2
BMO Capital Markets 0.3% 133 4.5% 53.7
BNP Paribas 0.2% 98 4.5% 53.2
B of A Securities 0.4% 100 4.5% 53.5
Banca IMI n/a 100 4.5% 53.4
Bancolombia SA n/a 180 n/a n/a
Banco Itau Europa n/a 130 4.5% 53.5
Bantleon Bank AG 0.3% 95 4.5% 52.0
Barclays Capital 0.4% 165 4.4% 54.0
Bayerische Landes. n/a 140 4.5% 53.5
Bear Stearns 0.5% 175 4.4% 54.5
BOT- Mitsubishi 0.6% 140 4.5% 53.7
Briefing.com 0.3% 130 4.5% 53.5
Calyon 0.3% 120 4.5% 54.0
CFC Group 0.3% 135 4.5% 55.0
CIBC World Markets 0.4% 170 4.5% 55.0
Citigroup 0.7% 140 4.5% 53.0
ClearView Economics 0.4% 125 4.6% 55.0
Commerzbank 0.3% 170 4.6% 52.0
Countrywide SEC 0.4% 100 4.5% 53.5
Credit Suisse 0.4% 150 4.5% 54.5
Daiwa Securities 0.4% 135 4.5% 54.5
Danske Bank 0.5% 175 4.5% 53.2
DekaBank 0.4% 160 4.5% 54.5
Desjardins Group 0.5% 125 4.5% 53.0
Deutsche Bank 0.4% 70 4.5% 53.0
Deutsche PostBank 0.2% 120 4.5% 53.7
Dresdner Kleinwort 0.2% 110 4.5% 52.0
DZ Bank 0.2% 120 4.5% 54.0
Essen Hyp. n/a 100 n/a n/a
FTN Financial 0.4% 175 4.5% 53.5
First Trust Advisors 0.4% 130 4.4% 54.5
Fortis 0.3% 170 4.4% 54.5
Global Insight 0.4% 160 4.5% 52.5
Goldman Sachs 0.3% 150 4.5% 54.0
H&R Block Financial 0.4% 120 4.5% 53.5
HBOS Treasury 0.8% 150 4.6% 52.0
HSH Nordbank AG n/a 110 4.6% n/a
Horizon Investments n/a 115 4.5% 52.0
IDEAglobal 0.0% 160 4.5% 54.0
ING Barings 0.4% 130 4.5% 52.0
Informa Global n/a 110 4.5% n/a
Insight Economics 0.4% 150 4.5% 53.5
Intesa-SanPaulo 0.4% 140 4.5% 53.7
J.P. Morgan Chase 0.5% 150 4.5% 54.0
JPMorgan Private 0.3% 150 4.5% 53.0
Landesbank BW 0.2% 100 4.6% 53.5
Lehman 0.4% 150 4.5% 54.0
Lloyds TSB 0.4% 150 4.5% 55.5
Maria Fiorini 0.4% 125 4.5% 54.0
Merrill Lynch 0.4% 115 4.5% 55.0
MFC Global Invest. 0.2% 100 4.5% 53.0
Mizuho Securities 0.1% 180 4.5% 55.5
Moody's Economy.com 0.3% 110 4.5% 54.0
Morgan Stanley 0.5% 175 4.5% 55.0
National Bank Fin. 0.2% 115 4.5% 53.0
National City Bank 0.4% 224 4.4% 56.1
Natixis 0.4% 125 4.5% 52.4
Nomura 0.3% 135 4.5% 51.0
Nord/LB 0.3% 120 4.5% 54.0
PNC Bank 0.5% 120 4.5% 53.5
RBS Greenwich Cap. 0.4% 145 4.5% 53.5
Regions Financial n/a 125 4.5% n/a
Ried, Thunberg n/a 140 4.5% 54.0
Scotia Capital 0.3% 115 4.5% 55.0
Societe Generale 0.3% 150 4.4% n/a
Stone & McCarthy 0.3% 60 4.5% 51.7
TD Securities 0.3% 160 n/a 54.0
Thomson/IFR 0.6% 145 4.4% 54.0
TD Securities 0.4% 150 4.5% 54.8
Tullett Prebon 0.5% 150 4.5% 54.0
Ulpia 0.2% 120 4.5% 55.5
Unigest 0.4% 115 4.5% 54.7
Univ. of MD 0.5% 180 4.5% 54.1
Wachovia n/a 145 4.5% 53.0
Wells Fargo 0.3% 100 4.5% 54.0
WestLB AG 0.2% 135 4.5% 54.0
Westpac Banking 0.5% 150 4.4% 54.0
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