(Corrects figure for average 2012 job growth in sixth paragraph of article published on May 27.)
Job growth probably picked up in May after the weakest gain in six months, and the U.S. unemployment rate held at a three-year low, signs of gradual improvement in the labor market, economists said before reports this week.
Payrolls climbed by 150,000 workers after a 115,000 gain in April, according to the median forecast of 68 economists surveyed by Bloomberg News ahead of Labor Department figures due June 1. Manufacturing cooled and household purchases increased, other data may show.
Bigger job and wage gains will probably be needed to trigger a self-sustaining cycle of increases in hiring and consumer spending that will spur the recovery. At the same time, slowdowns in Europe and parts of Asia threaten to curb exports and manufacturing, representing a barrier to faster growth.
“We have a labor market that’s improving, but not the kind of job growth that would really propel the recovery to a stronger phase,” said Julia Coronado, chief economist for North America at BNP Paribas in New York. “Barring a bad scenario in Europe, we would expect some stronger numbers in the second half of the year.”
Private payrolls, which exclude government jobs, climbed 160,000 in May after rising 130,000 last month, the weakest since August, economists forecast the Labor Department report will show.
The projected gain in total payrolls would bring the monthly average this year to 190,600, compared with 176,200 in the first five months of 2011.
The jobless rate, derived from a separate survey of households, held at a three-year low of 8.1 percent in May, economists in the Bloomberg survey predicted. Unemployment has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.
Federal Reserve officials reduced forecasts for the jobless rate, to an average 7.8 percent to 8 percent in the fourth quarter compared with a January projection of 8.2 percent to 8.5 percent, according to central tendency estimates released April 25. The new forecasts are still above policy makers’ estimates for full employment, which range from 5.2 percent to 6 percent.
Through April, the economy had recovered about 3.7 million of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009.
With the economy and unemployment the top issues in this year’s presidential race, presumptive Republican nominee Mitt Romney has criticized President Barack Obama by saying White House policies haven’t brought about a fast enough recovery from the downturn. The former Massachusetts governor has said in speeches and interviews that Obama is “not up to the task” of guiding the economy.
Even with the recent slowdown in the pace of job growth, Americans are spending. A Commerce Department report due June 1 will provide details of how consumption fared at the beginning of this quarter. Purchases may have grown 0.3 percent in April, matching the previous month’s gain, according to the Bloomberg survey median. Incomes also rose 0.3 percent following a 0.4 percent increase, economists said.
Sustained purchases are prompting companies like Amazon.com Inc., the world’s largest Internet retailer, to bring on new workers. The Seattle-based firm announced this month it plans to hire an additional 1,000 employees, according to the Puget Sound Business Journal.
Automobile sales are also making a bigger contribution to overall household spending. Demand for cars and light trucks so far this year is running at the fastest pace since 2008, according to industry data. Those gains are having a ripple effect through manufacturing and may help counter slowdowns in Europe and Asia.
The Institute for Supply Management Inc.’s factory index fell to 53.8 this month from a 10-month high of 54.8 in April, according to the Bloomberg survey median ahead of the June 1 report. A reading above 50 signals expansion.
Growing concern over the European debt crisis is weighing on investors. The Standard & Poor’s 500 Index has fallen 6.3 percent so far this month.
Falling gas prices and an improving labor market may give a boost to consumer confidence. The Conference Board’s gauge climbed to 69.5 in May from 69.2 the previous month, according to the Bloomberg survey. That would be in line with other measures -- the Bloomberg Consumer Comfort Index and the Thomson Reuters/University of Michigan index of consumer sentiment -- which have recently climbed to four-year highs.
Consumers may also be encouraged by stabilization in the housing market, the industry that precipitated the recession. Home prices declined 2.6 percent in the 12 months through March, the smallest decrease since the year ended December 2010, economists surveyed project a May 29 report from S&P/Case- Shiller will show.
Revised first-quarter gross domestic product figures probably showed a slower pace of expansion, economists said ahead of a May 31 report from the Commerce Department. The economy grew at a 1.9 percent annual rate from January through March, compared with the initial estimate of 2.2 percent, according to the Bloomberg survey.
Bloomberg Survey ============================================================== Release Period Prior Median Indicator Date Value Forecast ============================================================== Case Shiller Quarterly 5/29 1Q -4.0% -3.1% Case Shiller Monthly MO 5/29 March 0.2% 0.2% Case Shiller Monthly YO 5/29 March -3.5% -2.6% Consumer Conf Index 5/29 May 69.2 69.5 Pending Homes MOM% 5/30 April 4.1% 0.0% ADP Payroll ,000’s 5/31 May 119 150 Initial Claims ,000’s 5/31 26-May 370 370 GDP Annual QOQ% 5/31 1Q S 2.2% 1.9% Personal Consump. QOQ% 5/31 1Q S 2.9% 2.9% Nonfarm Payrolls ,000’s 6/1 May 115 150 Private Payrolls ,000’s 6/1 May 130 160 Manu Payrolls ,000’s 6/1 May 16 16 Unemployment Rate 6/1 May 8.1% 8.1% Hourly Earnings MOM% 6/1 May 0.0% 0.2% Hourly Earnings YOY% 6/1 May 1.8% 1.8% Avg Weekly Hours 6/1 May 34.5 34.5 Pers Inc MOM% 6/1 April 0.4% 0.3% Pers Spend MOM% 6/1 April 0.3% 0.3% Construct Spending MOM% 6/1 April 0.1% 0.4% ISM Manu Index 6/1 May 54.8 53.8 ==============================================================
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