The strengthening U.S. labor market will bring job creation and economic growth in 2011, said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina.
Applications for jobless benefits fell to 421,000, less than the median forecast of economists surveyed by Bloomberg News, from a revised 438,000 the prior week, Labor Department figures showed today. The four-week moving average dropped to the lowest level in more than two years.
“The sentiment is that labor economy is improving with jobless claims coming down,” Silvia said today in a Bloomberg Television interview on “Surveillance Midday” with Tom Keene. “We do expect job opportunities to improve throughout 2011.”
Wells Fargo this week raised its forecast for the monthly average private payroll growth in 2011 to 161,300 from 151,300.
“It’s not the kind of employment gains where you really get significant gains in the unemployment rate, but it’s enough to at least hold it steady right now,” Silvia said. Initial jobless claims falling to the 430,000 “area does signify to us that there is a change,” he said.
Wells Fargo also revised its forecast for growth in the world’s largest economy, raising it to 2.6 percent from 2.5 percent. Silvia cited the trend in jobless claims, stabilizing orders for capital goods and an improvement in Institute for Supply Management reports on services and manufacturing for the revision.
Silvia said the Federal Reserve’s decision last month to buy $600 billion in Treasury securities, along with Congress’s potential resolution on taxes “does suggest we’re going for growth.”
At the same time, the U.S. economy still faces headwinds as consumers pay off debts and cautious state and local governments reduce spending in the second half of 2011, Silvia said.