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By Joe Richter
May 4 (Bloomberg) -- The U.S. economy last month probably added the fewest jobs in two years as homebuilders and manufacturers fired workers, economists said before a government report today.
The projected 100,000 increase in payrolls would follow a 180,000 gain in March, according to the median estimate of 85 economists surveyed by Bloomberg News. The jobless rate is forecast to rise to 4.5 percent from the prior month's 4.4 percent, which matched a five-year low.
Job losses have so far been limited to factories and residential home-building sites, the parts of the economy that have suffered the most through a yearlong growth slowdown. Federal Reserve policy makers, who've said they are concerned a ``tight'' labor market will boost inflation, are forecast to leave interest rates unchanged next week.
``Consumer spending will probably slow from the first quarter, but respectable job and income growth should allow households to remain active,'' said Michael Moran, chief economist at Daiwa Securities America Inc. in New York.
The Labor Department is due to issue the report at 8:30 a.m. in Washington. The payroll estimates ranged from gains of 40,000 to 168,000. The economy added about 189,000 jobs a month in 2006.
Forecasts for the unemployment rate ranged from 4.3 percent to 4.6 percent. Because fewer people are entering the labor force than in years past, smaller payroll gains are needed to keep the unemployment rate stable, economists said.
`Tight' Labor Market
The Fed said last week in its regional economic survey that ``most districts reported tight labor market conditions'' between late February and mid-April. Wage gains didn't appear to be filtering through to consumer prices, the report also said.
The jobs report may show hourly wages rose 0.3 percent for a second month, according to the Bloomberg survey. Hourly earnings were probably up 3.9 percent in the 12 months ended in April, exceeding the 2.8 percent rise in consumer prices during the year ended in March.
The central bank on March 21 kept the benchmark overnight lending rate at 5.25 percent. All 69 economists surveyed by Bloomberg News forecast no change in the rate when central bankers meet on May 9.
The Labor Department report may show average weekly hours worked by production workers slipped to 33.8, from 33.9 in March, based on the median estimate of economists surveyed.
The slow pace of job gains last month reflects firings at construction companies and manufacturers, economists said.
Factory Job Loss
Manufacturers may have cut 14,000 jobs last month after shedding 16,000 positions in March, based on the median estimate in a Bloomberg survey of economists. Last year, factories trimmed an average of about 6,000 jobs a month.
Tecumseh Products Co., a maker of compressors and lawn- mower engines, said last week it will cut 310 jobs at seven plants in North America and one in the Czech Republic to try to boost productivity. The Tecumseh, Michigan-based company employed 18,500 people as of Dec. 31.
Today's report will also probably show a drop of 35,000 construction jobs in April, according to an estimate from JPMorgan Chase & Co.
Ian McCarthy, chief executive of Atlanta-based builder Beazer Homes USA Inc., said April 26 that the housing market remains ``extremely challenging,'' and he doesn't see any signs of recovery.
Other reports suggest weakness in the job market may be starting to broaden. A Conference Board survey released last week showed the share of Americans who said jobs were plentiful fell last month, while the proportion of those saying jobs were harder to get rose.
`Modest' Job Gains
``The economy has lost a little momentum and growth prospects remain somewhat questionable,'' said Ken Goldstein, a Conference Board economist in a statement April 26. ``Job growth may be modest this summer.''
ADP Employer Services this week said companies added 64,000 jobs last month, the fewest in almost four years. The ADP data are based only on a count of private payrolls which exclude government workers.
The job market is cooling as growth slows. The economy expanded at an annual rate of 1.3 percent in the first three months of the year, the weakest pace since the first quarter of 2003, the Commerce Department said last week. Consumer spending, which accounts for about 70 percent of the economy, rose at an annual rate of 3.8 percent.
``The current level of economic activity is consistent with an unemployment rate closer to 5 percent,'' Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc., said in a note to clients. ``We expect the unemployment rate to begin rising some time soon.''
Wal-Mart Stores Inc., the world's largest retailer, is among companies outside of housing and manufacturing that are reducing headcount. Bentonville, Arkansas-based Wal-Mart said last month it will cut 1,200 salaried jobs at its U.S. Sam's Club stores by giving fewer managers more responsibility.
Bloomberg Survey
FIRM Nonfarm Unemploy Manu Avg Hrly
Payroll Rate Payroll Earnings
------------------------------------------------------------
Number of replies 85 83 18 61
MEDIAN 100 4.5% -14 0.3%
AVERAGE 99 4.5% -13 0.3%
High Forecast 160 4.6% -5 0.4%
Low Forecast 40 4.3% -20 0.2%
Previous 180 4.4% -16 0.3%
------------------------------------------------------------
4CAST Ltd. 80 4.4% n/a 0.4%
Action Economics 110 4.4% -10 0.3%
AIG Global Invest. 112 4.5% n/a 0.4%
Alleti Gestielle SGR 102 4.5% -12 n/a
Allianz Dresdner 95 4.5% n/a 0.3%
Argus Research 100 4.3% -15 0.3%
BBVA 125 4.5% n/a 0.3%
BMO Capital Markets 90 4.5% n/a 0.4%
BNP Paribas 40 4.5% n/a 0.3%
B of A Securities 90 4.5% n/a 0.4%
Banca IMI 80 4.5% n/a n/a
Bancolombia SA 140 n/a n/a n/a
Banco Itau Europa 100 4.5% n/a n/a
Bantleon Bank AG 90 4.5% n/a n/a
Barclays Capital 110 4.5% n/a 0.3%
Bear Stearns 100 4.4% n/a 0.3%
BOT- Mitsubishi 135 4.5% -10 0.3%
Briefing.com 115 4.5% n/a 0.4%
Calyon 70 4.5% n/a 0.3%
CFC Group 110 4.5% n/a 0.4%
CIBC World Markets 115 4.5% n/a 0.3%
Citigroup 120 4.5% n/a 0.3%
ClearView Economics 120 4.6% n/a 0.3%
Commerzbank 90 4.5% -5 0.3%
Countrywide SEC 80 4.5% -15 n/a
Credit Suisse 100 4.5% n/a 0.3%
Daiwa Securities 135 4.5% n/a n/a
Danske Bank 110 4.5% n/a n/a
DekaBank 130 4.5% n/a 0.4%
Desjardins Group 90 4.5% n/a 0.3%
Deutsche Bank 113 4.5% n/a 0.4%
Deutsche PostBank 120 4.4% n/a n/a
Dresdner Kleinwort 75 4.5% -15 0.3%
DZ Bank 70 4.5% n/a 0.3%
FIMAT-Cube 75 4.5% n/a 0.3%
First Trust Advisors 50 4.4% -20 0.4%
Fortis 160 4.4% n/a n/a
Global Insight 110 4.5% n/a n/a
Goldman Sachs 75 4.5% n/a 0.3%
H&R Block Financial 120 4.5% -10 0.3%
High Frequency 100 4.6% n/a 0.3%
HBOS Treasury 130 4.5% n/a n/a
HSBC Markets 85 4.5% n/a 0.3%
Horizon Investments 80 4.5% n/a n/a
HypoVereinsbank 50 4.5% n/a n/a
IDEAglobal 125 4.5% -15 0.3%
ING Barings 100 4.5% n/a 0.3%
Informa Global 80 4.5% -5 0.4%
Insight Economics 125 4.5% n/a 0.3%
Intesa-SanPaulo 50 4.5% n/a n/a
IXIS-CIB 80 4.5% n/a 0.2%
J.P. Morgan Chase 75 4.5% n/a 0.3%
JPMorgan Private 125 4.5% n/a 0.3%
Landesbank Berlin 70 4.6% n/a n/a
Lehman 135 4.5% n/a 0.3%
Lloyds TSB 120 4.4% -14 n/a
Maria Fiorini 100 4.4% n/a 0.3%
Merrill Lynch 120 4.4% n/a 0.3%
MFC Global Invest. 75 4.5% -15 0.2%
Mizuho Securities 80 4.5% n/a 0.2%
Moody's Economy.com 90 4.5% n/a 0.3%
Morgan Stanley 80 4.5% n/a 0.4%
National Bank Fin. 90 4.5% n/a 0.3%
National City Bank 149 4.4% n/a 0.3%
Natixis 80 4.5% n/a 0.2%
Nomura 95 4.5% -14 0.3%
Nord/LB 80 4.5% n/a 0.3%
PNC Bank 90 4.5% -20 0.4%
RBC Capital 115 n/a n/a n/a
RBS Greenwich Cap. 140 4.4% -10 0.3%
Regions Financial 95 4.5% n/a n/a
Ried, Thunberg 110 4.5% n/a n/a
Scotia Capital 110 4.5% n/a 0.3%
Societe Generale 80 4.5% n/a 0.3%
Stone & McCarthy 50 4.5% -10 0.4%
TD Securities 100 4.4% n/a n/a
Thomson/IFR 115 4.4% n/a 0.3%
TD Securities 120 4.5% n/a 0.3%
Tullett Prebon 75 4.5% -15 0.3%
Unigest 120 4.5% n/a 0.3%
Univ. of MD 95 4.5% n/a n/a
Wachovia 130 4.4% n/a n/a
Wells Fargo 90 4.5% n/a 0.3%
WestLB AG 90 4.4% n/a n/a
Westpac Banking 100 4.5% n/a 0.3%
To contact the reporter on this story: Joe Richter in Washington at jrichter1@bloomberg.net
Last Updated: May 4, 2007 00:05 EDT
