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By Joe Richter
July 6 (Bloomberg) -- Employers in the U.S. probably created enough jobs last month to keep wages growing and the unemployment rate unchanged, economists said before a government report today.
The projected 125,000 increase in payrolls is based on the median estimate of 81 economists surveyed by Bloomberg News and would follow a 157,000 gain in May. The jobless rate is forecast to hold at 4.5 percent for a third month, near a six-year low.
Wage gains are giving consumers the means to cope with near-record gasoline prices and declining home values, keeping spending and the economy expanding into the second half of the year. The Federal Reserve remains concerned a low unemployment rate and rising labor costs will lead to higher prices, one reason policy makers aren't convinced inflation has been tamed.
``Job expansion is continuing at a pace that will keep income and spending on a moderate growth path,'' said Douglas Lee, president of Economics from Washington, a private consulting firm in Potomac, Maryland.
The Labor Department is due to issue the report at 8:30 a.m. in Washington. The payroll estimates ranged from gains of 85,000 to 155,000. The economy has added 133,000 jobs a month on average this year, down from 189,000 in 2006.
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 six-year low, and 4.6 percent since September.
Wages
Today's report is forecast to show hourly wages rose 0.3 percent for a second month, according to the Bloomberg survey. Hourly earnings were probably up 3.7 percent in the 12 months ended in June, compared with a 3.8 percent year-over-year increase the prior month.
While acknowledging that inflation pressures had moderated, the Fed last week repeated its warning that ``the high level of resource utilization,'' which economists say is their term for a low jobless rate, has the ``potential'' to lift prices.
Central bankers for that reason maintained that inflation was their ``predominant'' concern and kept the benchmark interest rate target at 5.25 percent for an eighth consecutive meeting. The Fed also said the economy is ``likely to continue to expand at a moderate pace over coming quarters.''
UAL Corp.'s United Airlines, the world's second-biggest carrier, said last month it would hire pilots for the first time since 2001 this year as it adds international flights. The Chicago-based carrier plans to add as many as 100 pilots in addition to recalls of furloughed employees.
ADP Survey
Private payrolls rose by 150,000 in June, according to a report yesterday from ADP Employer Services. The increase followed a gain of 98,000 in May.
``Employment growth has bottomed out and seems to be firming up,'' Joel Prakken, chairman of Macroeconomic Advisers in St. Louis, said in an interview yesterday. ``The economy is gathering momentum.'' Macroeconomic Advisers produces the report jointly with ADP.
Even a near standstill in growth hasn't caused the jobless rate to rise. The economy expanded at an annual rate of 0.7 percent from January through March, the weakest pace in more than four years, according to figures from the Commerce Department.
A pickup probably means the jobless rate won't rise much more, if at all, economists said. The economy will probably expand at an average 2.75 percent pace in the last six months of the year, according to economists surveyed by Bloomberg in June.
Consumer Spending
While consumer spending will slow from the first quarter's pace, gains in jobs and wages will help ensure it still contributes to growth, said economists such as Ethan Harris at Lehman Brothers Holdings Inc.
Job gains in service industries will offset losses at manufacturers and construction companies, economists said.
A glut of houses for sale is compounding a real-estate slump that has restrained homebuilding. Construction companies probably shed 25,000 workers during the month, according to Haseeb Ahmed, an economist at JPMorgan Chase Corp. in New York.
Factories may have cut 11,000 jobs last month after shedding 19,000 positions in May, based on the Bloomberg survey median. Manufacturing job losses have averaged about 16,000 so far this year, more than twice as much as in 2006.
Worthington Industries Inc., a Columbus, Ohio-based producer of steel parts for automakers, said it plans to close plants and cut jobs to save as much as $40 million after fourth- quarter profit plunged 36 percent.
Some economists project the unemployment rate will inch higher in coming months as companies try to hold down costs, casting doubt on the outlook for consumer spending.
A report last week from the Conference Board showed consumer confidence fell last month to the lowest level since August as concern grew that the labor market will weaken.
Bloomberg Survey
FIRM Nonfarm Unemploy
Payroll Rate
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Number of replies 81 79
MEDIAN 125 4.5%
AVERAGE 122 4.5%
High Forecast 155 4.6%
Low Forecast 85 4.4%
Previous 157 4.5%
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4CAST Ltd. 130 4.4%
Action Economics 155 4.5%
AIG Global Invest. 111 4.5%
Alleti Gestielle SGR 140 4.5%
Argus Research 115 4.4%
BBVA 130 4.5%
BMO Capital Markets 115 4.6%
BNP Paribas 100 4.6%
B of A Securities 105 4.5%
Banca IMI 115 4.5%
Bancolombia SA 140 n/a
Banco Itau Europa 140 4.5%
Bantleon Bank AG 130 4.5%
Barclays Capital 125 4.5%
Bear Stearns 120 4.5%
BOT- Mitsubishi 134 4.6%
Briefing.com 135 4.5%
Calyon 110 4.6%
CFC Group 140 4.5%
CIBC World Markets 125 4.5%
Citigroup 130 4.5%
ClearView Economics 125 4.6%
Commerzbank 100 4.5%
Countrywide SEC 85 4.5%
Credit Suisse 140 4.5%
Daiwa Securities 130 4.5%
Danske Bank 115 4.5%
DekaBank 110 4.6%
Desjardins Group 120 4.5%
Deutsche Bank 125 4.5%
Deutsche PostBank 120 4.5%
Dresdner Kleinwort 105 4.5%
DZ Bank 120 4.5%
Essen Hyp. 100 n/a
FIMAT-Cube 128 4.5%
FTN Financial 130 4.5%
First Trust Advisors 125 4.5%
Fortis 150 4.5%
Global Insight 140 4.5%
Goldman Sachs 150 4.5%
H&R Block Financial 110 4.5%
HBOS Treasury 150 4.6%
HSH Nordbank AG 140 4.5%
Horizon Investments 95 4.5%
IDEAglobal 130 4.5%
ING Barings 90 4.6%
Informa Global 90 4.6%
Insight Economics 135 4.5%
Intesa-SanPaulo 100 4.6%
J.P. Morgan Chase 125 4.5%
JPMorgan Private 115 4.5%
Lehman 150 4.5%
Lloyds TSB 120 4.5%
Maria Fiorini 100 4.5%
Merrill Lynch 100 4.5%
MFC Global Invest. 125 4.5%
Mizuho Securities 100 4.5%
Moody's Economy.com 120 4.6%
Morgan Stanley 100 4.6%
National Bank Fin. 90 4.6%
National City Bank 130 4.5%
Nomura 130 4.6%
Nord/LB 140 4.5%
PNC Bank 85 4.5%
RBS Greenwich Cap. 150 4.5%
Ried, Thunberg 130 4.5%
Scotia Capital 100 4.5%
Skandia 109 4.5%
Societe Generale 135 4.4%
Stone & McCarthy 100 4.5%
TD Securities 145 4.5%
Thomson/IFR 120 4.5%
Tullett Prebon 115 4.5%
UBS Securities LLC 125 4.5%
Unicredit- UBM 140 4.5%
Univ. of MD 120 4.5%
Wachovia 135 4.5%
Wells Fargo 135 4.5%
WestLB AG 100 4.5%
Westpac Banking 130 4.4%
Wrightson 130 4.5%
To contact the reporter on this story: Joe Richter in Washington at jrichter1@bloomberg.net
Last Updated: July 6, 2007 00:05 EDT
