Employers Probably Stepped Up Hiring: U.S. Economy PreviewShobhana Chandra
Employers probably added more jobs in September than the prior month and the U.S. jobless rate held at the lowest level since 2008, indicating progress in the labor market will help sustain growth, economists said before a report this week.
Payrolls rose by 180,000 workers, the most since April, after a 169,000 gain the prior month, according to the median forecast of 60 economists surveyed by Bloomberg ahead of Labor Department figures due Oct. 4. Manufacturing grew in August at close to the fastest pace in two years, separate data may show.
The unemployment rate remains elevated, according to Federal Reserve policy makers, who this month said they need evidence of more progress in the expansion before deciding to scale back record monetary stimulus. Faster growth in employment and wages would help spur household spending, the largest part of the economy, and generate more orders for businesses.
“Payrolls will rise in the same range as the past few months,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “The labor market is making progress, but it’s not enough. The economy is moving along at a slow pace.”
The projected gain in September payrolls would still be below the average 195,000 monthly increase in the first half of 2013. Through August, the U.S. had recovered 6.8 million of the 8.7 million jobs lost as a result of the 18-month recession that ended in June 2009.
The jobless rate, derived from a separate Labor Department survey of households than the payrolls tally, held for a second month at 7.3 percent, the lowest in more than four years, according to the Bloomberg survey. The rate declined in August as more people left the labor force.
Retailers have begun announcing plans to add workers for the holiday shopping season. Wal-Mart Stores Inc., the world’s largest retailer, is hiring 55,000 seasonal employees, a 10 percent rise from last year. The company also will move 35,000 to full-time status from part-time, and another 35,000 to part-time from temporary.
Kohl’s Corp. will hire about 53,000 workers for the holiday season, about the same as last year.
Holiday hiring by U.S. retailers may fall about 6.9 percent this year as weak consumer confidence and more efficient store practices reduce demand for seasonal workers, according to Challenger, Gray & Christmas Inc.
Target Corp. plans to take on about 70,000 workers, or 20 percent fewer than a year earlier.
Fed policy makers at their Sept. 17-18 meeting unexpectedly refrained from trimming the $85 billion pace of monthly bond buying, saying that a recent rise in market interest rates threatened to curb the expansion.
The central bank left unchanged its outlook that the target interest rate will remain near zero “at least as long as” the unemployment rate exceeds 6.5 percent, so long as the outlook for inflation is no higher than 2.5 percent, according to its statement.
“Conditions in the job market today are still far from what all of us would like to see,” Fed Chairman Ben S. Bernanke said at a press conference after the meeting.
Companies paring their workforce include Wells Fargo & Co., the biggest U.S. mortgage lender. The San Francisco-based bank will eliminate about 1,800 more jobs in its home-loan production business, in addition to 3,000 reductions announced earlier in the third quarter. Citigroup Inc., the fifth-biggest U.S. mortgage originator last year, is cutting about 1,000 jobs in its home-lending business.
An 18.6 percent gain in the Standard & Poor’s 500 Index this year and rising home values are boosting wealth and underpinning consumer spending. One bright spot is automobile sales, which rose in August at the strongest pace since November 2007, according to data from Ward’s Automotive Group. Purchases of other durable goods are also helping to sustain manufacturing.
The Institute for Supply Management Inc.’s factory index, due on Oct. 1, eased to 55.1 in September after the prior month’s 55.7 reading that was the strongest since June 2011, according to the Bloomberg survey median. Fifty is the dividing line between expansion and contraction.
Two days later, the Tempe, Arizona-based ISM group will release its services gauge, which covers almost 90 percent of the economy. The measure fell to 57 in September from 58.6, which was the strongest reading since December 2005, economists projected.
Bloomberg Survey =============================================================== Release Period Prior Median Indicator Date Value Forecast =============================================================== Construct Spending MOM% 10/1 Aug. 0.6% 0.4% ISM Manu Index 10/1 Sept. 55.7 55.1 Vehicle Sales Mlns 10/1 Sept. 16.0 15.8 Initial Claims ,000’s 10/3 28-Sep 305 313 ISM NonManu Index 10/3 Sept. 58.6 57.0 Nonfarm Payrolls ,000’s 10/4 Sept. 169 180 Private Payrolls ,000’s 10/4 Sept. 152 180 Unemploy Rate % 10/4 Sept. 7.3% 7.3% ================================================================