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December Job Gain in U.S. Probably Capped Best Year Since 2005

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A "Jobs" banner hangs outside the U.S. Chamber of Commerce in Washington, D.C. Through November, the U.S. had recovered 7.4 million of the 8.7 million jobs lost as a result of the 18-month recession that ended in June 2009. Photographer: Andrew Harrer/Bloomberg

Jan. 10 (Bloomberg) -- Employers probably expanded payrolls in December, capping the strongest year for U.S. employment since 2005, a report today may show.

The addition of 197,000 jobs followed a 203,000 advance the prior month, according to the median forecast of 90 economists in a Bloomberg survey. The projected gain would bring the annual increase to 2.27 million, which was last exceeded eight years ago. The unemployment rate may have held at a five-year low of 7 percent in December.

Ford Motor Co. and Southwest Airlines Co. are among companies taking on more staff as sales improve, which in turn will help sustain the consumer spending that accounts for almost 70 percent of the economy. A pickup in hiring helps explain the Federal Reserve’s decision to begin paring monthly asset purchases aimed at bolstering the expansion.

“We’re seeing a substantial improvement in the labor market,” said Richard DeKaser, a Washington-based corporate economist for Wells Fargo & Co., the largest U.S. home lender. “Monthly payroll gains will be in the 200,000 territory for much of 2014. Growth is beginning to pick up.”

The Labor Department’s report is due at 8:30 a.m. in Washington. Bloomberg survey estimates ranged from payroll increases of 100,000 to 250,000.

Some economists with projections at the lower end of the range say inclement weather during the week corresponding to the Labor Department’s survey held back the total. Bad weather can affect the payroll count if employees didn’t receive compensation for the entire pay period that included the 12th of the month.

Cold Weather

Last month was the coldest December since 2009 and snowfall was 21 percent above normal, according to weather-data provider Planalytics Inc. The second week of December was the coldest during a comparable period in more than 50 years, the firm said.

Today’s figures will include revisions to the household survey, which is used to calculate the monthly jobless rate. Data for the past five years are under review. Joblessness has fallen from a post-recession high of 10 percent, reached in October 2009.

Through November, the U.S. had recovered 7.4 million of the 8.7 million jobs lost as a result of the 18-month recession that ended in June 2009.

Economists also projected that private employment, which excludes government agencies, climbed by 200,000 in December following a 196,000 advance the prior month.

ADP Report

Figures this week from the ADP Research Institute in Roseland, New Jersey, showed companies added 238,000 workers last month, the most since November 2012.

Automakers, coming off their best sales year since 2007, are expanding staff. Dearborn, Michigan-based Ford, the second-largest U.S. automaker, plans to add 5,000 jobs in the U.S. as it introduces 16 new vehicles in North America this year.

Southwest Airlines, which last hired flight attendants from outside the company in 2011, received applications at a rate of 80 a minute, amassing 10,000 resumes for 750 openings. Chief Executive Officer Gary Kelly, in a weekly recorded message in December, said it was “like opening up the floodgates.”

Atlantic Group, an employment company specializing in financial services, is seeing an improvement as businesses gain confidence in the economy, according to founder John Ricco. The firm also is hiring in several divisions as demand picks up in accounting, finance, tax and technology.

More Confidence

“I’m hoping 2014 is really the year of the hire,” Ricco said in a Dec. 24 interview on Bloomberg Radio’s “Taking Stock.” “Confidence is slowly starting to trickle in.”

A rebound in manufacturing in the second half of 2013 has coincided with a pickup in hiring. Today’s report may show payrolls at factories grew by 16,000 in December after a 27,000 gain, according to the Bloomberg survey median.

The Institute for Supply Management’s factory index, released on Jan. 2, showed that manufacturing grew in December at the second-fastest pace in more than two years, with a gauge of employment advancing to its highest level since June 2011.

At the same time, some companies are trimming their workforce. Palo Alto, California-based Hewlett-Packard Co. plans to eliminate 5,000 positions in addition to the 29,000 already scheduled through fiscal 2014, the technology company reported in an annual filing.

Fed policy makers, who began cutting bond purchases to $75 billion this month from $85 billion, have cited the labor market’s improvement. At the same time, they also pledged to keep borrowing costs low.

Fed Pledge

It “likely will be appropriate” to hold the main interest rate near zero “well past the time that the unemployment rate declines below 6.5 percent, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal,” according to minutes of the central bank’s December meeting.

The state of the job market also has political ramifications. Democrats want to revive long-term unemployment benefits that expired Dec. 28 for about 1.3 million Americans, while a small group of Senate Republicans are seeking a bipartisan compromise to pay for the benefit extension.

                       Bloomberg Survey

====================================================
1/9/2014          Nonfarm  Private     Manu Unemploy
                 Payrolls Payrolls Payrolls     Rate
                   ,000’s   ,000’s   ,000’s        %
====================================================

Date of Release     01/10    01/10    01/10    01/10
Observation          Dec.     Dec.     Dec.     Dec.
----------------------------------------------------
Median                197      200       16     7.0%
Average               196      199       18     7.0%
High Forecast         250      250       47     7.5%
Low Forecast          100      105       10     6.8%
# of replies           90       45       24       82
Previous              203      196       27     7.0%
----------------------------------------------------
====================================================
1/9/2014          Nonfarm  Private     Manu Unemploy
                 Payrolls Payrolls Payrolls     Rate
                   ,000’s   ,000’s   ,000’s        %
====================================================
4CAST                 185      175     ---      7.1%
ABN Amro              210      200     ---      7.0%
Action Economics      190      195       15     7.0%
Ameriprise            220      220       24     7.0%
Banca Aletti          197      185       16     7.1%
Bank of the West      195     ---        20     7.0%
Bank of Tokyo         190     ---      ---      7.0%
Banorte-IXE           197     ---      ---      7.0%
Bantleon Bank AG      185     ---      ---      7.0%
Barclays              175      175     ---      7.0%
BBVA                  195      190       10     7.1%
BMO Capital Markets   204     ---      ---      7.0%
BNP Paribas           215     ---      ---      7.0%
BofA Merrill Lynch    220      225     ---      7.0%
Capital Economic      200     ---      ---      7.0%
CIBC World Markets    190     ---      ---      7.1%
====================================================
1/9/2014          Nonfarm  Private     Manu Unemploy
                 Payrolls Payrolls Payrolls     Rate
                   ,000’s   ,000’s   ,000’s        %
====================================================
Citi                  165      120       10     7.0%
CohnReznick           215      205     ---      ---
Comerica              200     ---      ---      6.9%
Commerzbank AG        210     ---      ---      6.9%
Credit Agricole       200     ---      ---      7.1%
Credit Suisse         215      210     ---      6.9%
CTI Capital           201     ---      ---      ---
Daiwa Securities      190     ---      ---      7.0%
DekaBank              210     ---      ---      7.0%
Desjardins Group      190     ---      ---      7.0%
Deutsche Bank         250      250     ---      6.8%
Dubuque Bank          207     ---      ---      7.1%
DZ Bank               190     ---      ---      7.0%
Fathom Financial      140     ---      ---      ---
First Trust           150      150       19     7.0%
FTN Financial         190      180     ---      7.0%
====================================================
1/9/2014          Nonfarm  Private     Manu Unemploy
                 Payrolls Payrolls Payrolls     Rate
                   ,000’s   ,000’s   ,000’s        %
====================================================
Goldman, Sachs        200      165     ---      7.0%
Haitong               230      223       47     7.0%
Helaba                175     ---      ---      7.0%
High Frequency        165     ---      ---      7.0%
HSBC Markets          191      188       15     7.0%
Hugh Johnson          190      205       10     7.0%
IDEAglobal            185      190       10     7.0%
IHS Global            191     ---      ---      7.1%
Informa Global        175     ---        15     7.0%
ING Financial         210      210       20     7.0%
J.P. Morgan Chase     215      215       10     7.0%
Janney Montgomery     185      180       15     7.0%
Jefferies             215      205       20     7.0%
Landesbank Berlin     180     ---      ---      7.0%
Landesbank BW         215     ---      ---      7.0%
LinkUp                100     ---      ---      ---
====================================================
1/9/2014          Nonfarm  Private     Manu Unemploy
                 Payrolls Payrolls Payrolls     Rate
                   ,000’s   ,000’s   ,000’s        %
====================================================
Lloyds Tsb Bank       197      197       10     7.1%
Maria Fiorini         215      215     ---      ---
Market Securities     205     ---      ---      7.0%
MET Capital           191      227     ---      7.0%
Mizuho Securities     175     ---      ---      7.1%
Moody’s Analytics     230      230       25     7.0%
Morgan Stanley        190     ---      ---      7.0%
National Bank Fin     210     ---      ---      7.0%
Nationwide            205     ---      ---      7.0%
Natixis               210     ---      ---      7.0%
Newedge               205     ---      ---      ---
Nomura Securities     175      175       15     7.0%
Nord/LB               195     ---        20     7.0%
OSK-DMG               186     ---      ---      7.1%
Pantheon              250      250     ---      6.9%
Paragon Research      132     ---      ---      7.0%
====================================================
1/9/2014          Nonfarm  Private     Manu Unemploy
                 Payrolls Payrolls Payrolls     Rate
                   ,000’s   ,000’s   ,000’s        %
====================================================
Pierian Capital       195      190     ---      7.0%
Pierpont              195      190     ---      7.0%
PineBridge            200     ---      ---      7.0%
PNC Bank              200     ---      ---      7.0%
Prestige              205     ---      ---      6.9%
Raiffeisenbank        220      215     ---      6.9%
Raymond James         230      225     ---      7.0%
RBC Capital Markets   185      185     ---      7.1%
RBS Securities        215      220     ---      7.1%
Regions Financial     214      208       24     7.1%
Scotiabank            185     ---      ---      7.0%
Societe Generale      225      220     ---      6.9%
Southbay Research     238      234     ---      ---
Southern Poly. St.    115      105     ---      7.5%
Standard Chartered    220      220     ---      7.0%
Sterne Agee           180     ---      ---      7.0%
====================================================
1/9/2014          Nonfarm  Private     Manu Unemploy
                 Payrolls Payrolls Payrolls     Rate
                   ,000’s   ,000’s   ,000’s        %
====================================================
Stone McCarthy        200      197       21     7.0%
TD Securities         203      196       22     7.0%
TrimTabs              125     ---      ---      ---
UBS                   185     ---      ---      6.9%
UniCredit             190     ---      ---      7.0%
University of MD      195      190       15     7.0%
Wells Fargo & Co      203     ---      ---      6.9%
Wells Fargo Corp      204      204     ---      7.0%
Westpac Banking       185     ---      ---      7.0%
Wrightson ICAP        200      200     ---      7.1%
====================================================

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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