Payrolls Probably Rose for Seventh Month: U.S. Economy Preview
Employment probably increased for a seventh straight month in April, while manufacturing stayed at the forefront of the expansion, economists said before reports this week.
Payrolls rose by 190,000 workers last month after a 216,000 advance in March, according to the median forecast of 56 economists surveyed by Bloomberg News ahead of Labor Department data on May 6. Other figures may show that both factories and service industries expanded in April.
The employment growth points to a labor market that Federal Reserve policy makers said last week is “improving gradually.” Increased hiring by companies such as McDonald’s Corp. (MCD) and wage gains may help sustain spending as Americans contend with higher food and fuel costs.
“We’ve entered this self-reinforcing phase where job gains are going to continue to build upon themselves at an accelerating pace,” said Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Manufacturing has led this recovery and it looks like it’s going to continue to do so, but the pace of growth going forward is going to moderate somewhat.”
A report from the Institute for Supply Management tomorrow may show that the purchasers’ factory index fell to 59.5 last month from 61.2 in March, according to the survey median. Readings above 50 signal factory expansion, and the measure in February rose to 61.4, the highest level since May 2004.
The Labor Department’s report on employment may also show that the jobless rate held at 8.8 percent in April, according to the survey median. Unemployment has not increased since November.
Private payrolls, which exclude government positions, are forecast to rise 200,000 in April, according to the survey median. The projected gain would cap the biggest three-month increase since 2006. Manufacturing employment is forecast to rise by 20,000, extending the longest string of monthly gains since 1997 to 1998.
“The broader economy is in a moderate recovery, and we have recently seen some welcome, if gradual, improvement in the labor market,” Fed Chairman Ben S. Bernanke said in an April 29 speech in Arlington, Virginia. “But our economy is far from where we would like it to be, and many people and neighborhoods are in danger of being left behind.”
Some companies are turning more optimistic about hiring. Oak Brook, Illinois-based McDonald’s, the world’s largest restaurant chain by revenue, sought as many as 50,000 workers in the U.S. during its National Hiring Day event on April 19.
“We do and have continued to hire through some of the economic downturns, Donald Thompson, chief operating officer at McDonald’s, said on an April 21 conference call.
The manufacturing industries that account for 11 percent of the economy are likely to keep driving the expansion as businesses replenish inventories and China and other emerging markets boost imports of American-made goods.
Factory orders rose 1.9 percent in March after a 0.1 percent decline the previous month, economists forecast that the Commerce Department will report on May 3.
Shares of manufacturers have outperformed the broader market this year. The Standard & Poor’s Machinery Index has increased 13 percent, compared with an 8.4 percent gain in the S&P 500 Index. (SPX)
Spending on U.S. construction may increase for the first time since November, rising 0.4 percent in March, economists said ahead of tomorrow’s report from the Commerce Department. Expenditures on structures, both commercial and residential, fell 1.4 percent in February.
Another report from the Institute for Supply Management, due May 4, will show service industries expanded in April, according to economists. The group’s index of non-manufacturing companies was probably little changed at 57.4 after 57.3 in March, the survey showed. Readings above 50 signal growth.
Americans may find it difficult to boost their spending as they pay more for groceries and gas. Regular fuel was $3.91 a gallon on April 28, the highest since July 2008, according to AAA, the nation’s biggest motoring organization. Food costs rose 0.8 percent last month, the most since July 2008, consumer-price index data from the Labor Department showed on April 15.
Bloomberg Survey ============================================================== Release Period Prior Median Indicator Date Value Forecast ============================================================== Construct Spending MOM% 5/2 March -1.4% 0.4% ISM Manu Index 5/2 April 61.2 59.5 Factory Orders MOM% 5/3 March -0.1% 1.9% ISM NonManu Index 5/4 March 57.3 57.4 Productivity QOQ% 5/5 1Q P 2.6% 1.0% Labor Costs QOQ% 5/5 1Q P -0.6% 0.8% Nonfarm Payrolls ,000’s 5/6 April 216 190 Private Payrolls ,000’s 5/6 April 230 200 Manu Payrolls ,000’s 5/6 April 17 20 Unemploy Rate % 5/6 April 8.8% 8.8% Hourly Earnings MOM% 5/6 April 0.0% 0.2% ==============================================================
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