Payrolls in U.S. Probably Expanded at a Quicker Pace in January
The labor market in the U.S. probably kept making progress in January even as lawmakers quarreled over the federal budget, economists said before a report today.
Employers hired 165,000 new workers last month, the most since August, following a 155,000 gain in December, according to the median forecast of 90 economists surveyed by Bloomberg ahead of today’s release. The unemployment rate in January held at 7.8 percent, where it’s been since November, the survey showed.
Sustained hiring gains are giving incomes a lift, buffering American workers from the sting of higher payroll taxes and helping them keep spending. At the same time, bigger employment advances are needed to drive down a jobless rate that Federal Reserve officials say is too high.
“The U.S. employment market is on glide path toward improvement,” said Eric Green, global head of rates and FX research at TD Securities Inc. in New York. “But we are nowhere near good enough to satisfy the Fed at this point in time.”
The Labor Department will release the employment figures at 8:30 a.m. in Washington.
Payroll projections ranged from gains of 115,000 to 230,000 in the Bloomberg survey. Private payrolls, which don’t include government jobs, rose by 168,000 in January for a second month, according to the survey median.
Forecasts for the unemployment rate ranged from 7.6 percent to 7.9 percent. The last time it was lower than 7.8 percent was in December 2008.
The Labor Department today will also issue its annual benchmark update, which aligns employment data spanning from April 2011 to March 2012 with corporate tax records. In September, it estimated the revision will show payrolls grew by an additional 386,000 workers in that period, boosting the current estimate for job growth of 1.94 million.
Additionally, the government will incorporate new Census Bureau population estimates into the household survey it uses to calculate the jobless rate. In the January 2012 employment report, the Labor Department boosted its count of the working- age population by 1.51 million after examining the new data, which led in turn to a participation rate that was lower than previously estimated. This year’s adjustment may be smaller because it will not draw from a decennial census.
Lastly, the Labor Department will update how it adjusts payroll figures for seasonal swings, potentially affecting data back to January 2008.
Projected payroll growth for this January almost matches the 153,000-average monthly gain of the past two years. In that period, unemployment fell 1.5 percentage points and 3.7 million Americans got back to work, shoring up incomes.
Stocks have risen in tandem with the progress in the labor market. The Standard & Poor’s 500 Index (SPX) is up about 19 percent since the end of 2011.
A private report earlier this week showed U.S. companies took on more workers than projected in January, enlarging headcounts by the most in almost a year. Last month’s 192,000 employment gain followed a revised 185,000 addition in December, according to Jan. 30 figures from the ADP Research Institute.
Among companies hiring was Lowe’s Cos., the second-largest U.S. home-improvement retailer, which has benefited from a recovery in the housing market. The Mooresville, North Carolina- based company said Jan. 22 it will take on 45,000 seasonal workers, 13 percent more than a year earlier, and add 9,000 permanent employees.
Ford Motor Co. (F) said last month it plans to hire 2,200 salaried employees in the U.S. this year, the most in more than a decade, in an expansion that shows the strength of the recovery in the second-largest U.S. automaker’s home market.
The steady pace of job creation, nonetheless, hasn’t been strong enough to dissuade the Fed from supporting the expansion through accommodative monetary policy. The central bank said this week it will keep purchasing securities at the rate of $85 billion a month after the economy paused in the fourth quarter.
“Employment has continued to expand at a moderate pace but the unemployment rate remains elevated,” the Federal Open Market Committee said at the Jan. 30 conclusion of its two-day meeting in Washington. The central bank also left unchanged its statement that it planned to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and inflation remains below 2.5 percent.
Aside from satisfying Fed officials, progress toward finding jobs for more of the 12.2 million unemployed Americans would help the economy overcome the fiscal cuts that have already taken place or may that may soon come.
Congress on Jan. 1 allowed the payroll tax that funds Social Security benefits to revert to 6.2 percent from 4.2 percent and boosted the levy on top income earners. Lawmakers are now battling over spending reductions scheduled for March 1 that would further crimp growth.
Manufacturing, which shows signs of emerging from a lull that began in the middle of last year, would also benefit from fewer spending reductions. Economists forecast the Institute for Supply Management’s January factory index, due today at 10 a.m., will rise to 50.6 from 50.2 the prior month, according to the survey median. Readings greater than 50 signal expansion.
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