Employment Probably Picked Up Entering 2011 as U.S. Economy Strengthened

Employment in the U.S. probably picked up in December, raising the odds the world’s largest economy will continue to strengthen in 2011, economists said before a report today.

A projected 150,000 gain in payrolls, the median forecast of 78 economists surveyed by Bloomberg News, would follow a 39,000 November increase and bring the total advance for last year to 1.1 million. The unemployment rate dropped to 9.7 percent from 9.8 percent, the survey showed.

More jobs and bigger paychecks may continue to lift sales, giving companies like Dollar General Corp. reason to keep adding workers and helping sustain the recovery. At the same time, the pace of progress signals it will take years to recover the 8.4 million jobs lost due to the recession, underscoring why the Federal Reserve is pumping more money into the economy.

“There’s reason for businesses to be a little more optimistic,” David Resler, chief economist at Nomura Securities International Inc. in New York, said in an interview with Bloomberg Television this week. “Businesses will be hiring if they think that hiring is going to increase their bottom line.”

The Labor Department’s figures are due at 8:30 a.m. in Washington. Survey projections for the increase in payrolls ranged from 98,000 to 240,000. The median climbed from 140,000 at the start of the week after an estimate from ADP Employer Services showed companies boosted employment by 297,000 workers last month.

Bernanke on Economy

The data will be out one hour before Fed Chairman Ben S. Bernanke is scheduled to testify before the Senate Budget Committee on monetary and fiscal policy and the economic outlook.

Private payrolls, which exclude government agencies, rose by 175,000 last month, the best performance in eight months, the survey showed.

Retailers and automakers are among industries hiring.

Dollar General, the biggest of the U.S. dollar discount stores, plans to add 6,000 jobs as it opens 625 more stores in fiscal 2011. The Goodlettsville, Tennessee-based company said it will have created 15,000 jobs from 2009 through 2011.

Ford Motor Co., the world’s most profitable automaker, is hiring 1,800 workers and spending $600 million to overhaul a factory in Louisville, Kentucky, to build small sport-utility vehicles, Marcey Evans, a Ford spokeswoman, said in an interview last month.

‘Cautiously Optimistic’

“While it appears that the economic environment has stabilized and is perhaps improving, persistent high unemployment and uncertainty in the economy could continue to pressure consumers and affect their spending,” Steven Temares, chief executive officer at Union, New Jersey-based Bed Bath & Beyond Inc., said on a teleconference with analysts Dec. 22. Still, “we remain cautiously optimistic,” he said.

Consumer spending, which accounts for about 70 percent of the economy, has picked up. Holiday purchases rose 5.5 percent, the best performance since 2005, said MasterCard Advisors’ SpendingPulse, which measures retail sales by all payment forms. That compared with a 4.1 percent gain a year earlier. The numbers include Internet sales and exclude automobile purchases.

Indications the economy was improving and rising corporate earnings helped fuel gains in the stock market last year. The Standard & Poor’s 500 Index rose 13 percent in 2010 after a 23 percent jump in 2009, making it the biggest two-year advance since the Internet-bubble rally of 1998 and 1999.

28-Year High

December is forecast to be the 17th month in which unemployment has been 9.5 percent or higher, showing that the pickup in hiring hasn’t been strong enough to reduce joblessness. For all of 2010, the jobless rate likely averaged 9.7 percent, the highest since 1982.

With today’s report, the Labor Department will also revise figures from its household survey used in calculating the unemployment rate going back five years. Benchmark revisions to the payroll data will be announced in February.

Employment at government agencies is projected to drop as states and municipalities grappling with budget gaps trim spending and reduce headcount. Florida may cut 5 percent of its state workforce to save costs, Governor-elect Rick Scott said in an interview Dec. 3 on Bloomberg Television’s “InBusiness With Margaret Brennan.”

High unemployment explains why Fed policy makers said they need to follow through on their plan to purchase an additional $600 billion in Treasury securities by June.

“The economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment,” officials said in a statement after their Dec. 14 meeting.

The struggling labor market is also a reason why President Barack Obama last month signed an $858 billion bill extending all Bush-era tax cuts for two years. The bill also continues expanded unemployment insurance benefits through 2011 and cuts payrolls taxes by 2 percentage points.

                         Bloomberg Survey
==============================================================
                           Nonfarm  Private Unemploy   Hourly
                          Payrolls Payrolls     Rate Earnings
                            ,000’s   ,000’s        %     MOM%
==============================================================

Date of Release              01/07    01/07    01/07    01/07
Observation Period            Dec.     Dec.     Dec.     Dec.
--------------------------------------------------------------
Median                         150      175     9.7%     0.2%
Average                        156      173     9.7%     0.2%
High Forecast                  240      230     9.9%     0.3%
Low Forecast                    98       90     9.5%     0.0%
Number of Participants          78       41       73       51
Previous                        39       50     9.8%     0.0%
--------------------------------------------------------------
4CAST Ltd.                     160     ---      9.7%     0.2%
ABN Amro Inc.                  135      145     9.7%     ---
Action Economics               170     ---      9.8%     0.1%
Aletti Gestielle               130      152     9.7%     ---
Ameriprise Financial           170      180     9.8%     0.2%
Banesto                        130     ---      ---      ---
Bank of Tokyo- Mitsubishi      168      174     9.9%     0.1%
Barclays Capital               150      165     9.7%     0.2%
Bayerische Landesbank          135     ---      9.7%     0.1%
BBVA                           130     ---      ---      ---
BMO Capital Markets            150     ---      9.7%     0.1%
BNP Paribas                    140      120     9.8%     0.1%
BofA Merrill Lynch Research    185      200     9.7%     0.2%
Briefing.com                   200      225     9.8%     0.1%
Capital Economics              175     ---      9.8%     0.2% CIBC World Markets             180     ---      9.7%     ---
Citi                           180      190     9.7%     0.2%
ClearView Economics            160      175     9.7%     0.2%
Commerzbank AG                 150     ---      9.8%     0.1%
Credit Agricole CIB            240     ---      9.7%     ---
Credit Suisse                  185      200     9.6%     0.2%
Daiwa Securities America       150     ---      ---      ---
DekaBank                       150     ---      9.7%     0.2%
Desjardins Group               125     ---      9.8%     0.1%
Deutsche Bank Securities       150     ---      9.6%     0.2%
Deutsche Postbank AG           110     ---      9.7%     ---
First Trust Advisors           215      230     9.7%     0.2%
FTN Financial                  100       90     9.8%     0.1%
Goldman, Sachs & Co.           100     ---      9.7%     0.1%
Helaba                         150     ---      9.7%     0.2%
High Frequency Economics       125      150     9.8%     0.2%
Horizon Investments            100     ---      9.8%     0.2%
HSBC Markets                   175      190     9.7%     ---
Hugh Johnson Advisors          150     ---      9.6%     0.2%
Ibersecurities                 110     ---      ---      ---
IDEAglobal                     155      165     9.7%     0.1%
IHS Global Insight             190      200     9.7%     0.2%
Informa Global Markets         135      140     9.7%     0.2%
ING Financial Markets          210      190     9.7%     0.2%
Insight Economics              150     ---      9.8%     0.1%
Intesa-SanPaulo                150     ---      9.7%     ---
J.P. Morgan Chase              160      170     9.7%     0.1%
Janney Montgomery Scott        225      215     9.7%     ---
Jefferies & Co.                215      225     9.6%     0.1%
Landesbank Berlin              120     ---      9.6%     0.2%
Landesbank BW                  135      145     9.7%     ---
Maria Fiorini Ramirez          165      180     9.7%     0.2%
MF Global                      140      160     9.6%     0.2%
Mizuho Securities              125     ---      9.8%     ---
Moody’s Analytics              165      175     9.8%     0.1%
Morgan Keegan & Co.            156     ---      9.7%     ---
Morgan Stanley & Co.           200     ---      9.7%     0.1%
National Bank Financial        100     ---      9.8%     ---
Natixis                        120     ---      9.8%     0.2%
Newedge                       ---       140     ---      ---
Nomura Securities Intl.        165     ---      9.6%     0.1%
OSK Group/DMG                  200     ---      9.8%     ---
Paragon Research               125     ---      9.7%     ---
Pierian Capital                150      163     9.5%     ---
Pierpont Securities            165     ---      9.7%     ---
PNC Bank                       150     ---      9.8%     ---
Prestige Economics             120      130     9.7%     ---
Raiffeisenbank International   100      100     9.8%     ---
Raymond James                  135      145     9.6%     0.2%
RBC Capital Markets            195      205     9.8%     ---
RBS Securities                 180     ---      9.8%     0.2%
Scotia Capital                 220     ---      9.6%     0.2%
Societe Generale               215      205     9.7%     ---
Standard Chartered             210      220     9.8%     0.1%
State Street Global Markets    182      196     9.7%     0.2%
Stone & McCarthy Research      115      137     9.7%     0.2%
TD Securities                  178      190     9.7%     0.3%
Thomson Reuters/IFR            200      210     9.7%     0.2%
UBS                            160      190     9.7%     0.2%
University of Maryland          98      108     9.8%     0.1%
Wells Fargo & Co.              156     ---      9.7%     ---
WestLB AG                      120     ---      ---      0.0%
Westpac Banking Co.            100     ---      9.8%     ---
Wrightson ICAP                 185      200     9.6%     0.2%
==============================================================

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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