U.S. Payrolls Probably Picked Up in Sign Economy Rebounding

July 08, 2011, 8:41 AM EDT By Shobhana Chandra

(Adds Obama to make statement in fifth paragraph.)

July 8 (Bloomberg) -- Employers in the U.S. probably added more workers in June than the prior month, indicating the labor market may be poised to pick up in the second half, economists said before a report today.

Payrolls rose by 105,000 workers after a 54,000 increase in May that was the smallest in eight months, according to the median of 85 estimates in a Bloomberg News survey. The projected gain probably failed to reduce the jobless rate, which economists forecast held at 9.1 percent.

Cheaper fuel that helps companies hold down costs may make it easier for them to step up hiring, setting the stage for a pickup in the consumer spending that accounts for about 70 percent of the economy. While the improvement reinforces the Federal Reserve’s view that the first-half slowdown was temporary, bigger payroll gains are needed for a sustained decline in the unemployment rate.

“Payrolls will start to look better in the second half as the economy shifts into higher gear,” said Christopher Low, chief economist at FTN Financial in New York. “We do have job growth, but it’s not enough. It’ll take a long time for the unemployment rate to come down significantly.”

The Labor Department’s payroll numbers are due at 8:30 a.m. in Washington. Bloomberg survey estimates ranged from increases of 40,000 to 175,000. President Barack Obama is due to make statement on the report at 10:35 a.m., the White House said.

Company Payrolls

The projected gain would be less than the 166,000 monthly average in the first quarter. Payroll increases of at least 200,000 a month are needed for a sustained decline in the unemployment rate, Low said.

Private payrolls, which exclude government agencies, increased by 132,000 after rising 83,000 in May, according to the survey median. Manufacturing employment probably rose by 5,000 in June, the figures may show.

Recent figures have shown the economy has started to perk up. Companies added twice as many workers as forecast last month, data from ADP Employer Services showed yesterday. An Institute for Supply Management report last week showed manufacturing unexpectedly accelerated in June.

The figures helped drive stocks higher. The Standard & Poor’s 500 Index jumped 1.1 percent to an almost two-month high yesterday. In Europe today, stocks were little changed amid renewed concern about the region’s debt crisis, with the Stoxx Europe 600 Index slipping 0.1 percent.

U.S. stock-index futures fell, with futures on the S&P down 0.2 percent to 1,349.7 at 11:48 a.m. in London.

Estimates in the Bloomberg survey for the unemployment rate ranged from 8.9 percent to 9.2 percent.

First Half of 2011

Policy makers “expect the unemployment rate to continue to decline but the pace of progress remains frustrating slow,” Fed Chairman Ben S. Bernanke said at a news conference after the central bank’s June 21-22 monetary policy meeting.

Fed officials have said the slowdown in economic growth in the first and second quarters partly reflected temporary factors. Manufacturers were hurt by supply disruptions in the aftermath of the earthquake in Japan, just as the surge in gasoline expenses limited spending on non-essential items by American consumers.

Central bankers in other countries are turning to tackling inflation after seeking to boost growth. Interest rates were raised this week in Sweden, the euro-area and China. China may now limit increases for the rest of the year after five shifts since mid-October, according to JPMorgan Chase & Co. and HSBC Holdings Plc. South Korea, India, Chile, Brazil and Poland have also all tightened monetary policy in the past month.

‘Improving Slowly’

While investors anticipate a further increase from the ECB this year, after its quarter-point boost yesterday, the Fed has signaled no imminent plan to lift its key rate from near zero amid weak expansion.

“The labor market is improving slowly,” Jenny Lin, senior U.S. economist at Ford Motor Co., said on a teleconference with analysts on July 1. “The economy is facing two temporary factors, which slowed growth -- the fuel price run-up and Japan impact. Both of these are reversing now and set the stage for some improved readings in the months ahead.”

Lack of faster progress in the labor market and in the economic recovery, which started in June 2009, has taken a toll on Obama’s approval ratings. Since he took office in January 2009, unemployment has increased by about a percentage point and the economy has lost 2.5 million jobs.

By a 44 percent to 34 percent margin, Americans say they believe they are worse off than when Obama took office, according to a Bloomberg National Poll conducted June 17-20.

--With assistance from Chris Middleton in Washington and Simon Kennedy in London. Editors: Vince Golle, Chris Wellisz

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 at cwellisz@bloomberg.net

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U.S. Payrolls Rise 18,000; Unemployment Rate Climbs to 9.2%

July 08, 2011, 10:01 AM EDT By Shobhana Chandra

(Updates with economist’s comment in eighth paragraph.)

July 8 (Bloomberg) -- U.S. employers added 18,000 workers in June, the fewest in nine months, and the unemployment rate unexpectedly climbed, indicating a struggling labor market.

The increase in payrolls followed a 25,000 gain that was less than half the rise initially estimated, Labor Department data showed today in Washington. The median estimate in a Bloomberg News survey called for a June gain of 105,000. The unemployment rate rose to 9.2 percent, the highest level this year. Hiring by companies, which excludes government agencies, was the weakest since May 2010.

Stocks plunged and Treasuries rose as the absence of stronger job growth caused earnings to stagnate, posing a threat to consumer spending that accounts for 70 percent of the economy. The second-quarter slowdown in hiring underscores a recovery that Federal Reserve Chairman Ben S. Bernanke said is “frustratingly slow.”

“The recovery is still fragile,” said Michelle Meyer, a senior U.S. economist at Bank of America Merrill Lynch in New York. “The economy is healing very gradually.”

Estimates of the 85 economists surveyed by Bloomberg for overall payrolls ranged from increases of 40,000 to 175,000. instant analysis.

The Standard & Poor’s 500 Index slumped 0.9 percent to 1,341.12 at 9:31 a.m. in New York. The yield on the benchmark 10-year note dropped to 3.05 percent from 3.14 percent late yesterday.

Unemployment Forecasts

The unemployment rate was forecast to hold at 9.1 percent, according to the survey median. Estimates ranged from 8.9 percent to 9.2 percent.

“Stunned,” was how Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, described his reaction. “This number will really turn your hair gray that’s for sure. The economy remains mired in its soft patch which is looking more like a deep bog.”

The jobless rate rose even as the participation rate declined to 64.1 percent, the lowest since March 1984. The Labor Department’s separate survey of households, used to calculate the unemployment rate, showed a 445,000 decrease in employment and a 173,000 increase in unemployment.

“The payroll number was lackluster and the household survey was even weaker as unemployment increased as a result of a sharp drop in employment and a decline in the number of people looking for jobs,” Meyer said.

Private hiring, which excludes government agencies, rose 57,000 last month after a 73,000 gain. It was projected to rise by 132,000, the survey showed.

Factory Employment

Factory payrolls rose by 6,000 in June after a 2,000 decline in the previous month.

Employment at service-providers increased 14,000 in June, the least since a decline in September. Construction employment fell 9,000 workers and retailers added 5,200 employees.

Government payrolls declined by 39,000 in June, the eighth straight decline. Employment at state and local governments declined by 25,000.

Average hourly earnings fell 1 cent to $22.99, today’s report showed. The average work week for all workers dropped to 34.3 hours, from 34.4 hours the prior month.

The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- increased to 16.2 percent from 15.8 percent.

The number of temporary workers decreased 12,000. Payrolls at temporary-help agencies often slows as companies seeing a steady increase in demand take on permanent staff.

Recent Figures

Recent figures had signaled the economy was starting to perk up after slowing in the first half of the year. Companies added twice as many workers as forecast last month, data from ADP Employer Services showed yesterday. An Institute for Supply Management report last week showed manufacturing unexpectedly accelerated in June.

Policy makers “expect the unemployment rate to continue to decline but the pace of progress remains frustratingly slow,” Bernanke said at a news conference after the central bank’s June 21-22 monetary policy meeting.

The economy expanded at a 1.9 percent annual rate in the first three months of the year, and economists surveyed by Bloomberg from June 28 to July 7 forecast second-quarter growth of 2 percent. In the final three months of 2010, the economy grew 3.1 percent.

Supply Disruptions

Fed officials have said the slowdown in economic growth in the first and second quarters partly reflected temporary factors. Manufacturers were hurt by supply disruptions in the aftermath of the earthquake in Japan, at the same time the surge in gasoline expenses limited spending on non-essential items by American consumers.

“The labor market is improving slowly,” Jenny Lin, senior U.S. economist at Ford Motor Co., said on a teleconference with analysts on July 1. “The economy is facing two temporary factors, which slowed growth -- the fuel price run-up and Japan impact. Both of these are reversing now and set the stage for some improved readings in the months ahead.”

Companies reducing staff include Lockheed Martin Corp., the world’s largest defense contractor. Bethesda, Maryland-based Lockheed on June 30 said it plans to cut about 1,500 employees. McLean, Virginia-based Gannett Co., the publisher of 82 newspapers including USA Today, also announced last month it is eliminating about 700 jobs.

Lack of faster progress in the labor market and in the economic recovery, which started in June 2009, has taken a toll on President Barack Obama’s approval ratings. Since he took office in January 2009, unemployment has increased by about a percentage point and the economy has lost 2.5 million jobs.

By a 44 percent to 34 percent margin, Americans say they believe they are worse off than when Obama took office, according to a Bloomberg National Poll conducted June 17-20.

--With assistance from Chris Middleton in Washington. Editor: Vince Golle, Christopher Wellisz

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 at cwellisz@bloomberg.net

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Payrolls Dropped in 27 U.S. States in May, Led by California

June 17, 2011, 10:48 AM EDT By Shobhana Chandra

June 17 (Bloomberg) -- Payrolls dropped in 27 U.S. states in May, indicating the weakening in the job market was broad- based.

California led the nation with a 29,200 decrease followed by New York with 24,700 fewer jobs, figures from the Labor Department showed today in Washington. The jobless rate fell in 24 states and rose in 13.

The report is consistent with nationwide figures released June 3 that showed employers added 54,000 workers in May, the fewest in eight months, and unemployment rose to 9.1 percent, the highest this year. Improvement in hiring across a wider swathe of the U.S. is needed to sustain consumer spending, which accounts for about 70 percent of the U.S. economy.

“Hiring is occurring but the job market is definitely not strong,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. “Corporations are not going to hire in droves until they are certain that the economic recovery is on terra firma.”

Payrolls fell by 14,200 in Pennsylvania, by 13,400 in Michigan and by 13,300 in Maryland, rounding out the top five states with the biggest declines in employment.

Florida, with an increase of 28,000, and Ohio, with a 12,000 advance, showed the biggest gains in hiring. In all, employment climbed in 22 states.

New Mexico showed the largest over-the-month drop in unemployment, as its jobless rate fell to 6.9 percent from 7.6 percent in April.

Highest, Lowest

Unemployment in Nevada remained the highest in the nation even as it fell to 12.1 percent in May from 12.5 percent the prior month. North Dakota’s jobless rate fell from 3.3 percent to 3.2 percent last month, the lowest in the U.S.

While the world’s largest economy has added jobs for eight consecutive months, the lack of a pickup in hiring makes it more likely that the Federal Reserve will keep its benchmark interest rate near zero into next year. The labor market also poses a challenge to President Barack Obama, whose re-election prospects hinge on pushing the jobless rate lower.

“Economic activity generally continued to expand since the last report, though a few districts indicated some deceleration,” the Fed said June 8 in its Beige Book survey of the economy. The job market improved “gradually across most of the nation.”

New Jersey’s unemployment rate climbed by 0.1 percentage point to 9.4 percent in May as the state lost 400 jobs, according to government data. The state’s jobless rate stayed at 9.3 percent in March and April as more people entered the workforce.

Budget Cuts

Further cutbacks in employment are expected as state and local governments try to cope with budget restraints. New Jersey’s 13-member Senate Budget Committee yesterday approved a plan to require government workers to pay more for health care and pensions.

State and local employment data are derived independently from the national statistics, which are typically released on the first Friday of every month. The state figures are subject to larger sampling errors because they come from smaller surveys, making the national figures more reliable, according to the government’s Bureau of Labor Statistics.

--Editors: Carlos Torres, Vince Golle

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

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

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