Employment in U.S. Probably Slowed as Companies Curbed Spending

The pace of hiring in the U.S. probably cooled in April as companies curbed spending in the face of rising raw-material costs, economists said ahead of a government report today.

Payrolls rose by 185,000 workers last month compared with a 216,000 advance in March, according to the median forecast of 86 economists surveyed by Bloomberg News. The jobless rate may have held at 8.8 percent.

The economic recovery that began in June 2009 may need to generate more jobs to ensure that consumers, whose spending accounts for 70 percent of the economy, will be able to weather rising fuel and food prices. An employment slowdown underscores why Federal Reserve policy makers last week decided to forge ahead with record monetary stimulus to bolster the expansion.

The current, “moderate” rate of job growth “is a pace that really wouldn’t do much for the unemployment rate,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “There’s a lot of slack in the economy, especially in the labor market. Higher gasoline prices have been a restraint in the near-term.”

The Labor Department’s jobs numbers are due at 8:30 a.m. in Washington. Bloomberg survey estimates range from payroll increases of 118,000 to 325,000.

Private payrolls, which exclude government positions, are forecast to rise by 200,000 following a 230,000 gain the previous month, according to the survey median. The projected April increase would be the smallest in three months.

Two-Year Low

The jobless rate dropped a percentage point over the four months ended March to reach 8.8 percent, the lowest level in two years. Estimates in the Bloomberg survey for April range from 8.6 percent to 9 percent.

While payrolls have grown each month since October, Fed Chairman Ben S. Bernanke said on April 27 that central bankers would like to see more strength in the U.S. labor market, noting that a recovery has been “quite slow.”

“The labor market is improving gradually,” Bernanke said to reporters during the first-ever press conference following a Federal Open Market Committee meeting. “We would like to make sure that that is sustainable. The longer it goes on, the more confident we are.”

Households may find it difficult to boost spending as they pay more for groceries and gas. The average price of regular gasoline was $3.99 a gallon on May 4, the highest since July 2008, according to AAA, the nation’s biggest motoring organization. Food costs rose 0.8 percent in March, also the most since July 2008, data from the Labor Department showed last month.

Stocks Retreat

Stocks have fallen over the past week on concerns that a slowdown in U.S. growth during the first three months of the year may be extending into the second quarter. The Standard & Poor’s 500 Index has declined 2.1 percent since April 29.

The S&P 500 Index (SPX) fell 0.9 percent yesterday, the most since April 18, after the biggest plunge in commodity prices since 2009. Cheap fuel prices would help ease the damage to consumer spending.

“If we get gasoline prices down, that should help consumer spending and in turn the job outlook,” said Raymond James’ Brown.

The economy expanded at a 1.8 percent annual pace in the first quarter, down from the 3.1 percent rate the previous three months, the Commerce Department said last week.

Growth Slowdown

Other economic measures are signaling a pause in the expansion. The Institute for Supply Management’s indexes of manufacturing and non-manufacturing companies both declined in April.

Some companies are still planning to add workers. “We are going to be hiring and growing employment in Puget Sound and in South Carolina over the foreseeable future,” Jim McNerney, chief executive officer of Boeing Co. (BA), said on an April 27 teleconference. “Production rates are fueling really an unprecedented growth for commercial airplanes.”

Manufacturing employment is forecast to rise by 20,000 in April after a 17,000 increase a month earlier, according to the Bloomberg survey. In January, factory payrolls rose 53,000.

                         Bloomberg Survey
 ==============================================================
                           Nonfarm  Private     Manu Unemploy
                          Payrolls Payrolls Payrolls     Rate
                            ,000’s   ,000’s   ,000’s        %
==============================================================
Date of Release              05/06    05/06    05/06    05/06
Observation Period           April    April    April    April
--------------------------------------------------------------
Median                         185      200       20     8.8%
Average                        187      203       20     8.8%
High Forecast                  325      350       40     9.0%
Low Forecast                   118      161        5     8.6%
Number of Participants          86       37       20       80
Previous                       216      230       17     8.8%
--------------------------------------------------------------
4CAST Ltd.                     160      180     ---      8.8%
ABN Amro                       180      200     ---      8.8%
Action Economics               185     ---        15     8.8%
Aletti Gestielle               195      228       20     8.8%
Ameriprise Financial           195      185       25     8.9%
Banesto                        200     ---      ---      ---
Bank of Tokyo- Mitsubishi      118     ---        18     8.8%
Bantleon Bank AG               170     ---      ---      8.9%
Barclays Capital               210      225     ---      8.7%
Bayerische Landesbank          185     ---      ---      8.8%
BBVA                           185      200     ---      8.8%
BMO Capital Markets            180     ---      ---      8.8%
BNP Paribas                    140     ---      ---      8.8%
BofA Merrill Lynch             175      190     ---      8.8%
Briefing.com                   175      200     ---      8.9%
Capital Economics              175     ---      ---      8.8%
CIBC World Markets             185     ---      ---      8.8%
Citi                           160      180       20     8.9%
ClearView Economics            220      240       20     8.8%
Commerzbank AG                 220     ---      ---      8.8%
Credit Agricole CIB            185     ---      ---      8.8%
Credit Suisse                  150      165     ---      8.8%
Daiwa Securities America       180     ---      ---      ---
DekaBank                       190     ---      ---      8.9%
Desjardins Group               180     ---      ---      8.9%
Deutsche Bank Securities       200     ---      ---      8.7%
Deutsche Postbank AG           180     ---      ---      8.8%
DZ Bank                        180     ---      ---      8.8%
Fact & Opinion Economics       235     ---      ---      8.8%
First Trust Advisors           190      210       25     8.8%
FTN Financial                  200     ---      ---      8.8%
Goldman, Sachs & Co.           175     ---      ---      8.8%
Helaba                         210     ---      ---      8.8%
High Frequency Economics       180     ---      ---      8.7%
HSBC Markets                   220     ---      ---      8.8%
Hugh Johnson Advisors          180     ---        15     8.9%
Ibersecurities                 187     ---      ---      ---
IDEAglobal                     225      245       25     8.8%
IHS Global Insight             185     ---      ---      8.8%
Informa Global Markets         185     ---        20     8.8%
ING Financial Markets          170      190       40     8.7%
Insight Economics              225     ---      ---      8.9%
Intesa-SanPaulo                200     ---      ---      8.8%
ITG Investment Research        160      175     ---      ---
J.P. Morgan Chase              165      180        5     8.8%
Janney Montgomery Scott        189      202       17     8.8%
Jefferies & Co.                150      165       25     8.7%
Landesbank Berlin              200     ---      ---      8.9%
Landesbank BW                  215     ---      ---      8.7%
Laurentian Bank                200      210     ---      8.8%
Maria Fiorini Ramirez          180      195     ---      8.8%
MET Capital Advisors           200     ---      ---      8.8%
MF Global                      250      270       10     8.8%
Mizuho Securities              175     ---      ---      8.7%
Moody’s Analytics              145      170     ---      8.8%
Morgan Keegan & Co.            196     ---      ---      8.8%
Morgan Stanley & Co.           160      175     ---      8.9%
National Bank Financial        190     ---      ---      8.8%
Natixis                        190     ---      ---      8.8%
Nomura Securities              150     ---      ---      8.8%
Nord/LB                        210      210       25     8.8%
OSK Group/DMG                  185     ---      ---      8.7%
Paragon Research               175     ---      ---      8.8%
Parthenon Group                137     ---      ---      8.8%
Pierpont Securities            225     ---      ---      8.8%
PineBridge Investments         225     ---      ---      8.8%
PNC Bank                       210     ---        10     8.9%
Prestige Economics             200      225     ---      8.8%
Raiffeisenbank International   210      220     ---      8.8%
Raymond James                  170      195     ---      8.7%
RBC Capital Markets            178      190     ---      8.7%
RBS Securities                 240      250     ---      8.8%
Scotia Capital                 170     ---      ---      8.8%
Societe Generale               325      350     ---      8.6%
Standard Chartered             135      175     ---      ---
State Street Global Markets    152      161       16     8.9%
Stone & McCarthy Research      150      165       20     8.7%
TD Securities                  170      185     ---      8.9%
TF Market Advisors             160     ---      ---      ---
UBS                            175      200     ---      8.7%
UniCredit Research             190     ---      ---      8.9%
University of Maryland         180      200       20     8.7%
Wells Fargo & Co.              165     ---      ---      8.7%
WestLB AG                      200     ---      ---      8.7%
Westpac Banking Co.            170     ---      ---      9.0%
Wrightson ICAP                 200      220     ---      8.9%
==============================================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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

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