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Payrolls in U.S. Probably Held Gains in December as Economy Grew

Payrolls in U.S. Climbed 155,000 in December; Jobless Rate 7.8%
Payrolls rose by 155,000 workers last month following a revised 161,000 advance in November that was more than initially estimated, Labor Department figures showed today in Washington. Photographer: Erik Schelzig/AP Photo

Jan. 4 (Bloomberg) -- Employers probably added workers in December at about the same pace as in the prior month, a sign the U.S. labor market sustained gains even as lawmakers were struggling to reach a budget deal, economists said before a report today.

Payrolls rose by 153,000 workers after increasing by 146,000 in November, according to the median forecast of 79 economists surveyed by Bloomberg. The unemployment rate may have held at 7.7 percent, the lowest since December 2008.

Improved hiring is helping underpin consumer spending at retailers from Macy’s Inc. to Gap Inc., where December sales beat analysts’ estimates. Even bigger advances in employment may need to wait for lawmakers to reach further agreement on a deficit-reduction plan after Congress this week averted income-tax increases on about 99 percent of households.

“There was some decent momentum in the labor market heading into 2013,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York. “The payrolls numbers would have been better in the absence of fiscal cliff concerns. Assuming the second round of fiscal negotiations is resolved, we could see an acceleration in the back half of the year.”

The Labor Department’s report is due at 8:30 a.m. in Washington. Bloomberg survey estimates ranged from increases of 80,000 to 305,000.

Unemployment Revisions

Today’s Labor Department report will include revisions to the household survey, which is used to calculate the monthly unemployment rate. Data for the past five years are under review.

Private employment, which excludes government agencies, climbed by 150,000 in December following a 147,000 increase the prior month, economists projected.

At 10 a.m., a report from the Institute for Supply Management may show its services index, which covers almost 90 percent of the economy, eased to 54 in December from the prior month’s 54.7 reading, according to the Bloomberg survey. A gauge above 50 signals expansion.

Progress in the labor market is underpinning Americans’ confidence and spending. Macy’s, the second-biggest U.S. department-store company, reported a 4.1 percent rise in December sales at stores open at least a year, while Gap, the largest U.S. specialty-apparel retailer, had a 5 percent increase.

Last year through November, payroll gains averaged about 151,500 a month compared with 147,000 in the same period of 2011. The U.S. has recovered 4.6 million of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009.

Shares Fell

Stocks fell yesterday after minutes of the Federal Reserve’s December meeting showed policy makers said they will probably end $85 billion in monthly bond purchases this year. The Standard & Poor’s 500 Index dropped 0.2 percent to 1,459.37 at the close in New York. The S&P 500 surged 2.5 percent the previous day, the biggest jump since December 2011, after Congress passed the bill averting the so-called fiscal cliff of $600 billion in tax increases and government spending cuts.

At the same time, a battle still looms over raising the $16.4 trillion debt limit and on automatic spending reductions, known as sequestration, that were delayed for two months.

Some chief executive officers including David Cote of Honeywell International Inc. are urging lawmakers to move quickly.

Long Term

“A plan that will truly help to expand the U.S. economy over the long term” is needed, Cote, who leads the maker of flight controls and thermostats, said in a Jan. 2 e-mailed statement.

“We’re in the same old fight with uncertainty still in the market,” said Brad Thompson, CEO of employee-owned Columbia Forest Products Inc., the largest North American maker of decorative hardwood plywood.

A bigger pickup in hiring was probably thwarted in late 2012 by concern over the possibility of fiscal tightening. Cintas Corp., a Cincinnati-based provider of uniforms and safety products, noted a “wait-and-see attitude” among clients, Chief Financial Officer William Gale said on a Dec. 20 earnings call with analysts.

In contrast, Winnebago Industries Inc., a Forest City, Iowa-based maker of motor homes, was expanding to increase production. The company hired about 160 people, or 12 percent more hourly employees, in the quarter ended Dec. 1.

Hiring Need

“We’re still supplementing by working overtime in many, many areas of the company,” Sarah Nielsen, chief financial officer, said on a Dec. 20 earnings conference call. “That’s been a factor for the last six months plus. And we’re going to have to continue to hire to support attrition.”

The goal of faster progress in the economy and labor market is one reason Federal Reserve policy makers, four years after cutting the main interest rate to around zero, have expanded their third round of so-called quantitative easing. The central bank on Dec. 12 said it would hold their target interest rate low “at least as long” as the unemployment rate remains above 6.5 percent and inflation projections are for no more than 2.5 percent.

                       Bloomberg Survey

================================================================
                           Nonfarm  Private     Manu Unemploy
                          Payrolls Payrolls Payrolls     Rate
                            ,000’s   ,000’s   ,000’s        %
================================================================

Date of Release              01/04    01/04    01/04    01/04
Observation Period            Dec.     Dec.     Dec.     Dec.
----------------------------------------------------------------
Median                         153      150        5     7.7%
Average                        156      157        3     7.7%
High Forecast                  305      220       15     7.9%
Low Forecast                    80      100      -15     7.6%
Number of Participants          79       47       20       74
Previous                       146      147       -7     7.7%
----------------------------------------------------------------
4CAST Ltd.                     175      180     ---      7.7%
ABN Amro Inc.                  140      150     ---      7.8%
Action Economics               140      145       -5     7.8%
Ameriprise Financial Inc       150      150        8     7.7%
Banca Aletti & C spa           180      208       15     7.7%
Bank of the West               140      144        2     7.7%
Bank of Tokyo- Mitsubishi      155     ---      ---      7.7%
Bantleon Bank AG               170     ---      ---      7.8%
Barclays                       150      155     ---      7.7%
BBVA                           151     ---      ---      7.8%
BMO Capital Markets            153     ---      ---      7.8%
BNP Paribas                    150      160     ---      7.8%
BofA Merrill Lynch Resear      130      140     ---      7.8%
Briefing.com                   150      165     ---      7.7%
Capital Economics              175     ---      ---      7.7%
CIBC World Markets             170     ---      ---      7.7%
Citi                           140     ---      ---      7.7%
ClearView Economics            125      130      -10     7.8%
CohnReznick                   ---       150     ---      ---
Commerzbank AG                 130      140     ---      7.8%
Credit Agricole CIB            140     ---      ---      7.8%
Credit Suisse                  185      195     ---      7.7%
CTI Capital Inc                200     ---      ---      ---
DekaBank                       120     ---      ---      7.7%
Desjardins Group               150     ---      ---      7.8%
Deutsche Bank Securities       190      205     ---      7.8%
Deutsche Postbank AG           150     ---      ---      7.6%
Fact & Opinion Economics       105      115     ---      7.8%
First Trust Advisors           180      180        0     7.7%
FTN Financial                  140      141     ---      7.8%
Goldman, Sachs & Co.           200     ---      ---      7.7%
Helaba                         150     ---      ---      7.8%
High Frequency Economics       175     ---      ---      7.7%
HSBC Markets                   130      131        0     7.7%
Hugh Johnson Advisors          132      132        0     7.8%
IDEAglobal                     165      170       10     7.7%
IHS Global Insight             160     ---      ---      7.7%
Informa Global Markets         180     ---        10     7.7%
ING Financial Markets          110      120       -8     7.7%
Insight Economics              185     ---      ---      7.8%
Intesa Sanpaolo                165     ---      ---      7.8%
J.P. Morgan Chase              195     ---      ---      7.7%
Jefferies & Co.                188      180        5     7.7%
Jobdig Inc                     305     ---      ---      ---
Landesbank Berlin               80     ---      ---      7.8%
Maria Fiorini Ramirez Inc      175      175     ---      ---
Market Securities              167     ---      ---      7.7%
MET Capital Advisors           140      114     ---      7.7%
Mizuho Securities              125     ---      ---      7.7%
Modal Asset                   ---       157     ---      ---
Moody’s Analytics              210      215       10     7.8%
Morgan Stanley & Co.           185     ---      ---      7.7%
National Bank Financial        160     ---      ---      7.7%
Natixis                        160     ---      ---      7.7%
Nomura Securities Intl.        150      150        5     7.7%
Nord/LB                        100     ---       -15     7.8%
OSK Group/DMG                  155     ---      ---      7.7%
Pantheon Macroeconomic         125      125     ---      7.8%
Pierpont Securities LLC        150      140     ---      7.8%
PineBridge Investments         100     ---      ---      7.8%
PNC Bank                       180      185        5     7.8%
Prestige Economics             160      165     ---      7.8%
Raiffeisenbank Internatio      120      135     ---      7.7%
Raymond James                  150      155     ---      7.7%
RBC Capital Markets            115      125     ---      7.7%
RBS Securities Inc.            130      135     ---      7.7%
Regions Financial Corp         184      178        4     7.8%
Renaissance Macro Researc      100      100     ---      7.7%
Scotiabank                     155     ---      ---      7.7%
SMBC Nikko Securities          175      170     ---      7.7%
Societe Generale               225      220     ---      7.6%
Southbay Research              165      171     ---      ---
Southern Polytechnic Stat       90     ---      ---      7.9%
Standard Chartered             175      170     ---      ---
Stone & McCarthy Research      200      196       15     7.7%
TD Securities                  107      110       15     7.8%
UBS                            145      150     ---      7.8%
University of Maryland         140      141       -5     7.8%
Wells Fargo & Co.              170     ---      ---      7.7%
Westpac Banking Co.            170     ---      ---      7.8%
Wrightson ICAP                 210      210     ---      7.8%
================================================================

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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

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