Job Market Probably Held Gains in December: U.S. Economy Preview
Employers probably added jobs in December at about the same pace as the prior month, showing the U.S. labor market held up as lawmakers struggled to resolve the fiscal impasse, economists said before a report this week.
Payrolls rose by 150,000 workers after a 146,000 gain in November, according to the median forecast of 54 economists surveyed by Bloomberg ahead of Labor Department figures due Jan. 4. The unemployment rate may have held at 7.7 percent, the lowest since December 2008.
“Job growth around 150,000 is a decent way to end the year,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “Businesses are worried but not panicked. We’ll see much stronger employment gains in the second half of 2013.”
The path to faster hiring was made difficult by the possibility of more than $600 billion in tax increases and government spending cuts in 2013. Other reports this week that are projected to show stability in manufacturing and expansion in the services industry underscore a resilient economy.
Stocks fell last week amid concern talks between President Barack Obama and congressional Republicans would fail to yield a budget deal. The Standard & Poor’s 500 Index decreased 1.9 percent last week.
The Labor Department’s report this week is projected to show that private employment, which excludes government agencies, climbed by 153,000 in December following a 147,000 increase, economists predicted.
Cintas Corp. (CTAS), a Cincinnati-based provider of uniforms, supplies and safety products, is among businesses that noted a “wait-and-see attitude” among clients on concern about the possibility of fiscal tightening, according to William Gale, chief financial officer.
Monthly job gains of 250,000 or more “should start impacting our types of customers and hopefully we’ll see that as we get into 2013, but I think it’s not a sure thing by any means right now,” Gale said on a Dec. 20 earnings call with analysts.
Payroll gains this year through November have averaged about 151,000 a month compared with 147,000 in the same period of 2011. The U.S. had recovered 4.6 million of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009.
The goal of faster progress in the labor market is one reason Federal Reserve policy makers decided on Dec. 12 to expand stimulus to spur the more than three-year-old recovery. The central bank, which has kept its benchmark interest rate close to zero since 2008, said it would hold borrowing costs 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.
Competition for available positions remains high. Delta Air Lines Inc. (DAL), the world’s second-largest carrier, received 22,000 applications for about 300 flight attendant jobs in the first week after posting the positions outside the company. The applications arrived at a rate of two per minute, Chief Executive Officer Richard Anderson told workers in a weekly recorded message. Interviews are slated for January, and those hired will begin flying in June, for the peak travel season.
Businesses that had said they’d step up holiday hiring compared to last year’s season included Macy’s Inc. (M), the second- biggest U.S. department-store chain, and Toys ‘R’ Us Inc., the world’s largest toy retailer.
Stabilizing global and U.S. demand may be reflected in other data this week. The Institute for Supply Management’s manufacturing index, due Jan. 2, rose to 50.3 in December from 49.5 the prior month, according to the Bloomberg survey median. Fifty is the dividing line between expansion and contraction.
Bigger gains at factories may be hard to attain as companies await clarity on taxes and government spending. While gross domestic product rose at a 3.1 percent annual rate from July through September, the fastest this year, corporate spending on equipment and software fell by the most since the second quarter of 2009.
A report on Jan. 4 may show the Tempe, Arizona-based ISM group’s services index, which covers almost 90 percent of the economy, also sustained growth. Economists forecast the measure came in at 54.3 in December after the prior month’s 54.7 reading.
Bloomberg Survey ============================================================== Release Period Prior Median Indicator Date Value Forecast ============================================================== ISM Manu Index 1/2 Dec. 49.5 50.3 Construct Spending MOM% 1/2 Nov. 1.4% 0.6% Initial Claims ,000’s 1/3 29-Dec 350 360 Vehicle Sales Mlns 1/3 Dec. 15.5 15.3 Nonfarm Payrolls ,000’s 1/4 Dec. 146 150 Private Payrolls ,000’s 1/4 Dec. 147 153 Unemploy Rate % 1/4 Dec. 7.7% 7.7% ISM NonManu Index 1/4 Dec. 54.7 54.3 ==============================================================
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