Employers probably added about as many workers in July as the prior month, helping trim the U.S. unemployment rate and showing the expansion will strengthen in the second half of 2013, economists said before a report today.
Payrolls rose by 185,000 workers after a 195,000 gain in June, according to the median forecast of 92 economists in a Bloomberg survey. The jobless rate fell to 7.5 percent, matching a four-year low, from 7.6 percent. Other data may show personal spending climbed in June by the most in four months.
Amazon.com Inc. (AMZN) and Ford Motor Co. (F) are among companies adding staff as rising home and automobile sales, more factory orders and improving consumer confidence signal the economy is poised to pick up. Federal Reserve officials, debating whether to trim bond purchases meant to stoke growth and cut the jobless rate, said this week the labor market has shown “improvement.”
“We’ll probably get decent payroll gains for July, consistent with healthy progress in the labor market,” said Brian Jones, a senior U.S. economist at Societe Generale in New York. “The economy is generating close to 200,000 jobs month after month, and the Fed’s got to be happy about that.”
The Labor Department’s report is due at 8:30 a.m. in Washington. Bloomberg survey estimates ranged from increases of 23,000 to 225,000.
Private employment, which excludes government agencies, climbed 195,000 after a 202,000 increase in June, economists predicted.
Also at 8:30 a.m., Commerce Department figures will shed light on how household spending, which accounts for about 70 percent of the economy, was faring as the second quarter drew to a close. Consumer purchases grew 0.5 percent in June after a 0.3 percent gain a month earlier, according to the Bloomberg survey median. Income may have increased by 0.4 percent, they said.
Stocks rallied yesterday, sending the Standard & Poor’s 500 Index above 1,700 for the first time, after central banks vowed to maintain stimulus and data on global manufacturing beat forecasts. The Standard & Poor’s 500 Index advanced 1.3 percent to 1,706.87.
Improving prospects for the second half of the year may sustain the job market. Economists surveyed by Bloomberg from July 5 to July 10 project growth will average 2.5 percent during the period, according to the median.
Gross domestic product, the value of all goods and services produced, grew at a 1.7 percent annualized rate in the April through June period after a 1.1 percent advance in the prior three months, Commerce Department data showed on July 31.
Payroll gains averaged 202,000 a month in the first half of this year, up from 180,000 in the final six months of 2012. Such gains are typically linked with growth of close to 3 percent, say economists at UniCredit Group and Deutsche Bank Securities Inc. That’s double what the GDP data showed this week.
The disconnect is underscored by businesses’ plans to expand their workforce. Amazon.com, the world’s biggest Web retailer, announced in July it is adding more than 5,000 full-time jobs at U.S. warehouses to meet demand. The Seattle-based company also is hiring 2,000 customer-service staff, including part-time and seasonal workers.
Ford, the second-largest U.S. automaker, reported second-quarter per-share profit excluding some items that beat the average estimate of analysts surveyed by Bloomberg. The Dearborn, Michigan-based company said it’ll hire 3,000 salaried employees this year, 800 more than originally planned.
“The automotive sector of our economy has now contributed greatly to overall growth during this expansion,” Ellen Hughes-Cromwick, chief economist at Ford, said on a conference call yesterday. “Job and income gains are positive and interest rates remained relatively low.”
Households continue to keep spending on big-ticket items such as automobiles. Cars and light trucks sold at a 15.6 million annualized rate in July and 15.9 million the prior month, the strongest back-to-back readings since late 2007, according to figures yesterday from Ward’s Automotive Group.
Sustained gains in employment help explain recent increases in consumer sentiment. The Bloomberg Consumer Comfort Index rose last week to the strongest reading since January 2008.
The payrolls report today may also show employment at factories increased in July for the first time in five months, according to the Bloomberg survey.
The Institute for Supply Management’s factory index, released yesterday, showed manufacturing expanded in July at the fastest pace in more than two years, sparked by surges in orders and production that signal companies are growing more optimistic about the economic outlook.
The Fed may begin tapering the pace of its asset purchases in September, according to a growing number of economists surveyed by Bloomberg from July 18 to July 22.
“Labor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated,” policy makers said in their statement this week at the conclusion of a two-day meeting in Washington. The Federal Open Market Committee also said it will maintain its $85 billion in monthly bond buying. “Economic growth will pick up from its recent pace and the unemployment rate will gradually decline.”
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