Payroll Gains in U.S. on Track for Best Year Since 2005

Photographer: Ty Wright/Bloomberg

A recruiter, left, speaks with a job seeker at the Columbus Career Fair in Columbus, Ohio. Close

A recruiter, left, speaks with a job seeker at the Columbus Career Fair in Columbus, Ohio.

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Photographer: Ty Wright/Bloomberg

A recruiter, left, speaks with a job seeker at the Columbus Career Fair in Columbus, Ohio.

Job growth in November was probably strong enough to keep payroll gains on track for the best year since 2005, economists said before a report today.

Employers added 185,000 workers last month after taking on 204,000 in October, based on the median forecast of 89 economists in a Bloomberg survey before today’s report from the Labor Department. The unemployment rate dropped to 7.2 percent, matching an almost five-year low, from 7.3 percent as federal employees returned to work, according to the survey median.

The pickup in employment over the last three months signals companies are confident that demand will improve and gives American workers the means to spend. The data also underscore the view of Federal Reserve policy makers that labor conditions are brightening as they consider when to scale back record monetary stimulus.

“It’s sort of uncanny how steady the growth has been,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. “The improvement in the job market is sufficient over time that an extraordinary amount of quantitative easing -- $85 billion a month, almost $1 trillion a year -- isn’t going to be necessary as we go through 2014.”

The economy has added more than 186,000 jobs a month on average so far in 2013 compared with 182,750 in 2012. Average payroll growth this year would be the strongest since 207,000 in 2005.

The Labor Department figures will be released at 8:30 a.m. in Washington. Bloomberg survey estimates for payrolls ranged from increases of 115,000 to 230,000.

Forecasts for the unemployment rate, derived from a separate Labor Department survey of households, range from 7 percent to 7.5 percent. In October, joblessness rose for the first time in five months, reflecting workers furloughed during a federal government shutdown that lasted for 16 days.

Private Hiring

Private hiring, which excludes government agencies, increased 180,000 in November after a 212,000 advance the prior month, according to the Bloomberg survey median.

Faster progress in the labor market could hasten the Fed’s decision to taper its current round of easing that began last year. At that time, more stimulus was needed to shore up the economy and speed America’s return to full employment. The central bank will slow its purchases after its March meeting, according to the median estimate in a Bloomberg survey of 32 economists taken last month.

“A stronger-than-expected nonfarm payroll report could prove pivotal for market expectations, helping to bring the odds of a January announcement closer to even,” Gennadiy Goldberg, U.S. strategist at TD Securities in New York, wrote in a Dec. 2 note to clients.

Beige Book

The Fed said in its latest Beige Book business survey, released this week, that gains in manufacturing, technology and housing fueled “modest to moderate” economic growth from early October through mid-November.

“Hiring showed a modest increase or was unchanged,” the central bank said in its survey, which contains anecdotal reports from the 12 Fed district banks two weeks before the officials meet to set monetary policy.

Among companies adding positions is Cognizant Technology Solutions Corp., one of the largest providers of outsourcing services. Teaneck, New Jersey-based Cognizant plans to add about 10,000 U.S. workers, expanding its 29,000-employee domestic workforce over the next three years, President Gordon Coburn said in a speech in Texas this week.

“The stabilization of the economy in the U.S. has given our clients more comfort in innovation and investing in growing their own top line,” Coburn said in an interview.

Factory Jobs

Manufacturing payrolls are projected to increase for a fourth month, according to the Bloomberg survey.

The Institute for Supply Management’s factory index, released Dec. 2, showed manufacturing expanded in November at the fastest since April 2011. The figures showed factory employment expanded the most since April 2012, a sign companies were growing more optimistic about the economic outlook.

While factories are adding workers, an increase in borrowing costs since May is causing some financial firms to pare staff as fewer Americans refinance mortgages.

A net 15,282 mortgage-related jobs were lost in the third quarter, the worst since 2007, according to the Mortgage Daily’s Mortgage Employment Index.

“Rising rates dragged down refinance activity and eliminated the need for production employees,” according to Sam Garcia, publisher for Mortgage Daily, an online industry news publication.

Consumer Spending

More jobs, rising stock prices and an improvement in home prices are giving consumers the wherewithal to boost spending, which makes up about 70 percent of the economy.

Households continue to purchase big-ticket items such as automobiles. Cars and light trucks sold at a 16.3 million annualized rate in November, the fastest pace since 2007, according to figures yesterday from Ward’s Automotive Group.

Further job growth would help bolster consumer sentiment, which has faltered since the middle of the year. The Thomson Reuters/University of Michigan sentiment indicator was at 75.1 in November compared with a six-year high of 85.1 in July.

                    Bloomberg Survey

========================================================
12/5/2013         Nonfarm  Private     Manu Unemploy
                 Payrolls Payrolls Payrolls     Rate
                   ,000’s   ,000’s   ,000’s        %
========================================================

Date of Release     12/06    12/06    12/06    12/06
Observation          Nov.     Nov.     Nov.     Nov.
--------------------------------------------------------
Median                185      180       10     7.2%
Average               183      181       10     7.2%
High Forecast         230      220       30     7.5%
Low Forecast          115      120        0     7.0%
# of replies           89       49       25       82
Previous              204      212       19     7.3%
--------------------------------------------------------
4CAST Ltd.            185      175     ---      7.2%
ABN Amro Inc.         210      200     ---      7.2%
Action Economics      170      180       15     7.2%
Ameriprise Finan      185      185       17     7.1%
Banca Aletti & C      166      177        6     7.2%
Bank of the West      200     ---        30     7.2%
Bank of Tokyo- M      200     ---      ---      7.1%
Banorte-IXE           187     ---      ---      7.2%
Bantleon Bank AG      190     ---      ---      7.1%
Barclays              200      200     ---      7.1%
Bayerische Lande      188     ---      ---      7.2%
BBVA                  170      177        7     7.2%
BMO Capital Mark      180     ---      ---      7.2%
BNP Paribas           180     ---      ---      7.3%
BofA Merrill Lyn      175      180     ---      7.2%
Capital Economic      180     ---      ---      7.2%
CIBC World Marke      200     ---      ---      7.1%
Citi                  180     ---      ---      7.1%
ClearView Econom      195      200     ---      7.1%
CohnReznick           210      220     ---      ---
Commerzbank AG        185     ---      ---      7.1%
Credit Agricole       200     ---      ---      7.2%
Credit Suisse         180      175     ---      7.2%
CTI Capital Inc       200     ---      ---      ---
Daiwa Securities      190     ---      ---      7.2%
Danske Bank A/S       190     ---      ---      7.2%
DekaBank              200     ---      ---      7.0%
Desjardins Group      190     ---      ---      7.3%
Deutsche Bank Se      185      190     ---      7.2%
Dubuque Bank & T      187     ---      ---      ---
DZ Bank               160     ---      ---      7.4%
Fathom Financial      223     ---      ---      ---
First Trust Advi      200      197       17     7.2%
FTN Financial         175      185     ---      7.2%
Goldman, Sachs &      175      175     ---      7.1%
Haitong Internat      200      210       19     7.2%
Helaba                200     ---      ---      7.2%
High Frequency E      175      180     ---      7.1%
HSBC Markets          165      159        6     7.1%
Hugh Johnson Adv      160      160        5     7.2%
IDEAglobal            185      190        5     7.2%
IHS Global Insig      185     ---      ---      7.2%
Informa Global M      175     ---        15     7.3%
ING Financial Ma      170      165       10     7.1%
Intesa Sanpaolo       200     ---      ---      7.2%
J.P. Morgan Chas      180      175       10     7.2%
Janney Montgomer      165      180        0     7.3%
Jefferies LLC         205      200       10     7.1%
Landesbank Berli      175     ---      ---      7.2%
Landesbank BW         230     ---      ---      7.2%
Lloyds Tsb Bank       175      175        5     7.3%
Maria Fiorini Ra      180      175     ---      ---
Market Securitie      200     ---      ---      7.1%
MET Capital Advi      180      140     ---      7.2%
Mizuho Securitie      175     ---      ---      7.2%
Moody’s Analytic      200      205        5     7.2%
Morgan Stanley        195      195       15     7.1%
National Bank Fi      190     ---      ---      7.2%
Natixis               190     ---      ---      7.3%
Newedge               185      190     ---      7.3%
Nomura Securitie      170      170        0     7.1%
Nord/LB               175      165        5     7.3%
OSK-DMG               186     ---      ---      7.2%
Oxford Economics      178     ---      ---      7.2%
Pantheon Macroec      160      180     ---      7.2%
Paragon Research      192     ---      ---      7.1%
Pierpont Securit      180      170     ---      7.1%
PNC Bank              185      190       10     7.1%
Prestige Economi      230     ---      ---      7.1%
Raiffeisenbank I      190      185     ---      7.2%
Raymond James         200      195     ---      7.2%
RBC Capital Mark      170      175     ---      7.1%
RBS Securities I      195      195     ---      7.2%
Regions Financia      201      207       10     7.2%
Scotiabank            125     ---      ---      7.3%
Societe Generale      150      145     ---      7.0%
Southbay Researc      181      186     ---      ---
Southern Polytec      130      120     ---      7.5%
Standard Charter      165      170     ---      7.2%
Stone McCarthy R      200      207       14     7.1%
TD Securities         187      162       10     7.2%
TrimTabs Investm      115     ---      ---      ---
UBS                   190      190     ---      7.0%
UniCredit Resear      175     ---      ---      7.2%
Union Investment      190     ---      ---      7.2%
University of Ma      160      170        5     7.2%
Wells Fargo & Co      170     ---      ---      7.2%
Westpac Banking       140     ---      ---      7.3%
Wrightson ICAP        185      185     ---      7.2%
========================================================

To contact the reporter on this story: Jeanna Smialek in Washington at jsmialek1@bloomberg.net

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

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