Employment in U.S. Probably Rose, Keeping Jobless Rate Steady

Employers probably increased payrolls in January, a sign companies are gaining confidence the U.S. expansion will weather Europe’s slump, economists said before a report today.

Employment grew by 140,000 after rising by 200,000 in December, according to the median forecast of 89 economists surveyed by Bloomberg News. The jobless rate may have held at an almost three-year low of 8.5 percent. Another report may show service industries expanded at a faster pace last month.

“The labor market continues to churn out new jobs at a respectable pace,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “We aren’t back to normal yet, but we are on our way.”

More hiring and larger wage gains are needed to ensure that consumer spending, which accounts for about 70 percent of the economy, strengthens after growing at the weakest pace of any post-World War II expansion. Concern that the jobless rate remains too high is one reason the Federal Reserve last week said it will keep interest rates low for a longer period.

The Labor Department’s jobs report is due at 8:30 a.m. Payroll estimates in the Bloomberg survey ranged from increases of 95,000 to 225,000.

Transportation Jobs

The estimated gain in January payrolls is smaller than the prior month’s increase as economists, including Ellen Zentner at Nomura Securities International Inc. in New York, forecast a surge in hiring at transportation companies will be unwound. The Labor Department may have had trouble adjusting the data for swings in hiring and firing of roughly 40,000 workers temporarily employed during the holidays by delivery companies like United Parcel Service Inc. and FedEx Corp.. (FDX)

Private payrolls are forecast to rise by 160,000 in January, after a 212,000 gain the prior month, the biggest back- to-back increase since March-April, according to the survey median. Manufacturing payrolls are forecast to rise by 13,000 after a 23,000 gain.

Peoria, Illinois-based Caterpillar Inc. (CAT), the world’s biggest maker of earthmoving equipment, plans to increase employment this year as it expands facilities, including in Victoria, Texas, and Winston-Salem, North Carolina, Chief Financial Officer Edward Rapp said yesterday.

“Those are the things that will lead to employment growth here,” Rapp said in an interview with Betty Liu on Bloomberg Television’s “In the Loop.”

Signs in recent months of an improving economy have helped drive up stock prices. The Standard & Poor’s 500 Index has climbed 17 percent since the end of the third quarter.

Fed’s View

High unemployment is one reason why the Fed on Jan. 25 said it would keep its benchmark lending rate low at least until late 2014 from a prior estimate of mid-2013.

“We still have a long way to go before the labor market can be said to be operating normally,” Fed Chairman Ben S. Bernanke told the House Budget Committee in Washington yesterday. “Fortunately, over the past few months, indicators of spending, production and job-market activity have shown some signs of improvement.”

With today’s jobs report, the government will issue its annual benchmark update, which aligns the data with corporate tax records and covers the period from April 2010 to March 2011. The Labor Department estimated in September that payrolls for the 12 months would be increased by 192,000.

It will also include changes to the figures used to adjust the data for seasonal swings which will affect numbers back to January 2007.

Revisions Included

In addition, the report will include methodology changes to the household survey, incorporating new population data from the decennial census, according to the Labor Department.

The government last week reported the economy grew at a 2.8 percent annual pace in the fourth quarter after a 1.8 percent gain in the prior three months.

Consumer spending rose at a 2 percent pace last quarter, less than the median forecast of economists surveyed. Household purchases climbed 2.2 percent in 2011 after an increase of 2 percent in 2010, the weakest two-year performance of any expansion since the end of World War II.

A report from the Institute for Supply Management at 10 a.m. will show the non-manufacturing index that tracks almost 90 percent of the economy rose to 53.2 this month, the highest since August, from 53 in December, according to the median forecast of economists surveyed. A reading greater than 50 signals growth.

A report from the Commerce Department at 10 a.m. may show factory orders increased 1.5 percent in December after a 1.8 percent gain the prior month, according to economists surveyed.

                       Bloomberg Survey

==============================================================
                           Nonfarm  Private     Manu Unemploy
                          Payrolls Payrolls Payrolls     Rate
                            ,000’s   ,000’s   ,000’s        %
==============================================================
Date of Release              02/03    02/03    02/03    02/03
Observation Period           Jan.     Jan.     Jan.     Jan.
--------------------------------------------------------------
Median                         140      160       13     8.5%
Average                        146      162       15     8.5%
High Forecast                  225      250       26     8.7%
Low Forecast                    95      110        9     8.3%
Number of Participants          89       49       21       85
Previous                       200      212       23     8.5%
--------------------------------------------------------------
4CAST Ltd.                     110      120     ---      8.5%
ABN Amro Inc.                  160      180     ---      8.5%
Action Economics               170      185       10     8.6%
Aletti Gestielle               130      145     ---      8.5%
Ameriprise Financial Inc       165      175       20     8.6%
Banca Aletti & C spa           140      159       20     8.5%
Banesto                        180     ---      ---      ---
Bank of Tokyo- Mitsubishi     ---       200     ---      ---
Bantleon Bank AG               140     ---      ---      8.5%
Barclays Capital               150      170     ---      8.4%
Bayerische Landesbank          140     ---      ---      8.5%
BMO Capital Markets            130     ---      ---      8.6%
BNP Paribas                    125     ---      ---      8.4%
BofA Merrill Lynch Resear      125      135     ---      8.6%
Briefing.com                   225      250     ---      8.4%
Capital Economics              150     ---      ---      8.4%
CIBC World Markets             170     ---      ---      8.4%
Citi                           100      110     ---      8.6%
ClearView Economics            150      165       15     8.6%
Comerica Inc                   180     ---        12     8.4%
Commerzbank AG                 180      200     ---      8.5%
Credit Agricole CIB            120     ---      ---      8.5%
Credit Suisse                  120      135     ---      8.5%
Daiwa Securities America       130     ---      ---      8.6%
Danske Bank                    135     ---      ---      ---
DekaBank                       120     ---      ---      8.5%
Desjardins Group               170     ---      ---      8.6%
Deutsche Bank Securities       170      185     ---      8.4%
Deutsche Postbank AG           160     ---      ---      8.5%
DZ Bank                        155     ---      ---      8.5%
Exane                          160     ---      ---      8.5%
Fact & Opinion Economics       210      190     ---      8.5%
First Trust Advisors           137      155        9     8.5%
FTN Financial                  170      180     ---      8.5%
Goldman, Sachs & Co.           125     ---      ---      8.4%
Helaba                         125     ---      ---      8.5%
Herrmann Forecasting LLC       133      150       26     8.5%
High Frequency Economics       125     ---      ---      8.6%
HSBC Markets                   115      128       12     8.5%
Hugh Johnson Advisors          180      200       20     8.6%
IDEAglobal                     175      190       10     8.5%
IHS Global Insight             100     ---      ---      8.6%
Informa Global Markets         145     ---        15     8.6%
ING Financial Markets          160      180       17     8.6%
Insight Economics              175     ---      ---      8.7%
Intesa Sanpaulo                145     ---      ---      8.5%
Iur Capital Llc                130     ---      ---      8.6%
J.P. Morgan Chase              115      130       20     8.5%
Janney Montgomery Scott L      124      145       10     8.6%
Jefferies & Co.                160      175       10     8.5%
Landesbank Berlin              100     ---      ---      8.6%
Landesbank BW                  150     ---      ---      8.5%
Laurentian Bank Securitie      120      130     ---      8.6%
LCA Consultores                175     ---      ---      ---
Maria Fiorini Ramirez Inc      125      145     ---      ---
Market Securities              133     ---      ---      8.4%
MET Capital Advisors           223     ---      ---      8.4%
Mizuho Securities              125      150     ---      8.6%
Moody’s Analytics              100      125       20     8.6%
Morgan Keegan & Co.            164     ---      ---      8.6%
Morgan Stanley & Co.           100     ---      ---      8.5%
National Bank Financial        125     ---      ---      8.5%
Natixis                        150     ---      ---      8.4%
Nomura Securities Intl.        170      185       10     8.3%
Nord/LB                        150      170       10     8.5%
OSK Group/DMG                  165     ---      ---      8.5%
O’Sullivan                     140      160     ---      8.5%
Paragon Research               210     ---      ---      8.5%
Parthenon Group                144     ---      ---      8.5%
Pierpont Securities LLC        130      145     ---      8.5%
PineBridge Investments         215      235     ---      8.4%
PNC Bank                       135     ---      ---      8.6%
Prestige Economics             190      200     ---      8.5%
Raiffeisenbank Internatio      150      170     ---      8.5%
Raymond James                  135      145     ---      8.5%
RBC Capital Markets            110      125     ---      8.6%
RBS Securities Inc.             95      115     ---      8.5%
Scotia Capital                 160      180       10     8.4%
SMBC Nikko Securities          190      200     ---      8.5%
Societe Generale               110      125     ---      8.4%
Standard Chartered             155      180     ---      8.5%
Stone & McCarthy Research      100      115       25     8.5%
TD Securities                  135      150     ---      8.6%
UBS                            130      150     ---      8.5%
UniCredit Research             140     ---      ---      8.6%
University of Maryland         151      171       13     8.5%
Wells Fargo & Co.              122     ---      ---      8.4%
WestLB AG                      170     ---      ---      8.5%
Westpac Banking Co.            150     ---      ---      8.6%
Wrightson ICAP                 135      150     ---      8.4%
==============================================================

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 in Washington at cwellisz@bloomberg.net

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