Payrolls in U.S. Probably Climbed Even Amid Budget Cuts

Photographer: Peter Foley/Bloomberg

Job seekers fill out a job applications during the NYC Restaurant Job Expo at the Gabarron Foundation in New York on April 9, 2013. Close

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Photographer: Peter Foley/Bloomberg

Job seekers fill out a job applications during the NYC Restaurant Job Expo at the Gabarron Foundation in New York on April 9, 2013.

Employers probably took on more staff in April than in the prior month and the jobless rate held at a four-year low, indicating the U.S. labor market withstood the initial stages of federal budget cuts, economists said before a report today.

The Labor Department said it expects to go forward with the release of the April employment data on schedule today after a fire overnight in the building. Jennifer Kaplan, a department spokeswoman, said the report “should be” issued at 8:30 a.m. Washington time.

Payrolls increased by 140,000 workers following a gain of 88,000 in March, according to the median estimate in a Bloomberg survey of 90 economists. The jobless rate stayed at 7.6 percent, matching the lowest since December 2008, the survey showed.

“There continues to be moderate improvement in the labor market,” said Robert Stein, senior economist at First Trust Portfolios LP in Wheaton, Illinois, and the second-best payrolls forecaster in the past two years, according to data compiled by Bloomberg. “The reason for forward progress is that the economy is still growing.”

Spending Cuts

Employment picked up last month even as planned government spending cuts, which officials at the Federal Reserve this week said are hampering growth, spread through the economy. A prolonged slowdown may yet restrain hiring, making it more difficult to reduce a jobless rate that central bankers continue to view as too high.

While the Labor Department’s payrolls figures are projected to show a pickup in job growth after a March slowdown, the pace is weaker than the 197,000 average gain in the six months through February.

The Labor Department will release the employment figures at 8:30 a.m. in Washington. Economists’ payroll estimates ranged from increases of 100,000 to 238,000 in the Bloomberg survey.

Private payrolls, which don’t include government agencies, grew by 150,000 workers in April after a 95,000 gain the prior month, the survey showed.

Other figures today are projected to show a decline in March factory orders and service industries expanded last month at the slowest pace since July.

Private Payrolls

A report based on private payrolls earlier this week showed companies hired fewer workers than anticipated in April. Headcounts at businesses grew by 119,000 last month, the fewest since September, after a 131,000 gain in March, according to May 1 figures from the ADP Research Institute.

Fed policy makers said earlier this week they plan to maintain $85 billion a month in bond purchases to spur growth and employment prospects. They also said they were prepared to raise or lower the amount should the economic outlook change.

“Labor market conditions have shown some improvement in recent months, on balance, but the unemployment rate remains elevated,” the Federal Open Market Committee said in a May 1 statement. While pointing out that consumer spending, business investment and the housing recovery have advanced, the central bankers said “fiscal policy is restraining economic growth.”

Stocks fell on May 1 after the ADP report hinted at waning job generation and after the Fed said it would keep injecting cash into the economy. The Standard & Poor’s 500 Index dropped 0.9 percent.

Budget Restrictions

The Fed’s concern stems from the $85 billion in planned budget reductions, known as sequestration, which commenced on March 1. The Congressional Budget Office has estimated the cuts will trim the nation’s gross domestic product by 0.6 percentage point in 2013.

April’s projected pace of payroll growth, nonetheless, signals employers haven’t yet retreated in anticipation of weaker demand. Ford Motor Co. (F), reacting to U.S. pickup sales that have gained momentum for almost two years straight, said it plans to add workers at an F-150 truck factory to boost production.

Ford will hire a third crew at its plant in Claycomo, Missouri, to boost F-150 output starting in the third quarter, the company said yesterday in a statement. The No. 2 U.S. automaker is adding more than 2,000 employees at the factory for the extra pickup production and to begin building the Transit commercial van in mid-2014.

“It’s a huge vote of confidence in our truck, our sales and what’s going on in the industry overall and the economy,” Joe Hinrichs, Ford’s president of the Americas, said in a telephone interview. “We wouldn’t be hiring if we didn’t think it was going to last.”

Also today, the Institute for Supply Management will release its non-manufacturing index at 10 a.m. Economists forecast the gauge was little changed at 54 in April from 54.4 a month earlier. Readings greater than 50 signal expansion.

A report from the Commerce Department at the same time is projected to show a 2.9 percent decline in March factory orders, the most since August, as demand slumped for commercial aircraft and business equipment.

T

Bloomberg Survey

================================================================

Nonfarm Private Unemploy ISM Non-

Payrolls Payrolls Rate Manu

,000’s ,000’s % Index ================================================================

Date of Release 05/03 05/03 05/03 05/03 Observation Period April April April April ---------------------------------------------------------------- Median 140 150 7.6% 54.0 Average 143 154 7.6% 53.9 High Forecast 238 220 7.7% 55.1 Low Forecast 100 105 7.5% 52.0 Number of Participants 90 50 84 71 Previous 88 95 7.6% 54.4 ---------------------------------------------------------------- 4CAST Ltd. 145 155 7.7% 54.0 ABN Amro Inc. 150 165 7.6% 53.5 Action Economics 140 155 7.6% 55.0 Ameriprise Financial Inc 122 130 7.7% 54.1 Banca Aletti & C spa 142 176 7.6% --- Bank of the West 145 160 7.6% 54.0 Bank of Tokyo- Mitsubishi 180 --- 7.5% --- Banorte-IXE 130 --- 7.6% 53.2 Barclays 150 160 7.6% 54.0 Bayerische Landesbank 162 --- 7.6% 53.9 BBVA 160 --- 7.6% 54.0 BMO Capital Markets 160 --- 7.7% 54.2 BNP Paribas 120 145 7.7% 53.5 BofA Merrill Lynch Resear 125 150 7.7% 54.5 Capital Economics 125 --- 7.6% 53.5 CIBC World Markets 165 --- 7.7% 53.8 Citi 140 145 7.7% 53.0 ClearView Economics 155 150 7.5% 54.0 CohnReznick 170 180 --- --- Comerica Inc 160 --- 7.7% 53.5 Commerzbank AG 120 130 7.6% 54.5 Credit Agricole CIB 120 --- 7.6% --- Credit Suisse 135 145 7.6% 53.5 CTI Capital Inc 120 --- --- --- Daiwa Securities America 190 --- 7.6% 54.5 DekaBank 135 --- 7.5% 53.5 Desjardins Group 125 --- 7.7% 54.0 Deutsche Bank Securities 140 150 7.6% 54.0 Deutsche Postbank AG 130 --- 7.6% 53.5 DZ Bank 140 --- 7.6% 54.0 First Trust Advisors 180 190 7.6% 55.0 FTN Financial 120 140 7.6% 54.0 Goldman, Sachs & Co. 150 --- 7.6% 53.0 Hammer Partners SA 150 --- 7.6% 54.0 Helaba 150 --- 7.6% 53.5 High Frequency Economics 135 --- 7.6% 54.5 HSBC Markets 170 177 7.6% 54.4 Hugh Johnson Advisors 150 150 7.6% 53.6 IDEAglobal 165 175 7.6% 54.0 IHS Global Insight 155 --- 7.7% 54.0 Informa Global Markets 140 --- 7.6% 53.4 ING Financial Markets 140 155 7.5% 53.8 Intesa Sanpaolo 150 --- 7.6% 54.5 J.P. Morgan Chase 145 150 7.6% 53.5 Janney Montgomery Scott L 131 151 7.6% 55.0 Jefferies LLC 175 185 7.6% 55.0 John Hancock Financial 170 --- 7.6% --- Landesbank Berlin 100 --- 7.7% 53.5 Landesbank BW 130 --- 7.6% 53.0 LinkUp 238 --- --- --- Lloyds Tsb Bank Plc 188 199 7.6% 54.7 Maria Fiorini Ramirez Inc 145 160 --- 54.5 Market Securities 130 --- 7.6% --- MET Capital Advisors 100 144 7.6% --- Mizuho Securities 125 --- 7.7% 54.0 Modal Asset 105 105 --- --- Moody’s Analytics 125 130 7.6% 54.1 Morgan Stanley 110 135 7.6% --- National Bank Financial 130 --- 7.7% 54.0 Natixis 130 --- 7.5% 54.0 Nomura Securities Intl. 100 110 7.5% 52.9 Nord/LB 130 --- 7.6% 54.0 OSK Group/DMG 145 --- 7.6% 53.8 Oxford Economics Ltd 150 160 7.7% 54.0 Pantheon Macroeconomic 100 --- 7.6% 53.0 Paragon Research 184 --- 7.6% --- Pierpont Securities LLC 140 140 7.6% 53.7 PNC Bank 160 175 7.7% 55.0 Prestige Economics 135 --- 7.6% 54.2 Raiffeisenbank Internatio 150 135 7.7% --- Raymond James 125 140 7.6% 53.8 RBC Capital Markets 140 150 7.6% 54.0 RBS Securities Inc. 150 160 7.6% 54.4 Regions Financial Corp 180 190 7.6% --- Santander Asset Mgmt 140 150 7.6% --- Scotiabank 125 --- 7.6% 54.0 SMBC Nikko Securities 200 220 7.5% 53.0 Societe Generale 175 185 7.5% 53.0 Southbay Research 115 124 --- --- Southern Polytechnic Stat 110 125 7.7% --- Standard Chartered Bank 120 130 7.6% 53.0 Stone & McCarthy Research 155 165 7.6% 52.0 TD Securities 162 175 7.6% 53.0 UBS 130 140 7.6% 54.0 UniCredit Research 175 --- 7.6% --- Union Investment 130 --- 7.7% --- University of Maryland 133 146 7.6% 54.0 Wells Fargo & Co. 128 --- 7.6% 55.1 Westpac Banking Co. 120 --- 7.7% 54.0 Wrightson ICAP 150 160 7.6% 53.5 ================================================================


To contact the reporter on this story:
Alex Kowalski in Washington at 
akowalski13@bloomberg.net

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



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