Feb. 6 (Bloomberg) -- U.S. companies may have added 175,000 workers to payrolls in January, the most in three years, and the unemployment rate may have held at a 15-month low, evidence that a rebounding economy is generating more jobs, a survey showed in advance of today's Labor Department statistics. The jump in payrolls would be the biggest since November 2000 and cap six months of job gains, based on the median forecast of 69 economists surveyed by Bloomberg News. The economy created 1,000 jobs in December, confounding forecasts of a 150,000 increase. The jobless rate may have matched the December reading of 5.7 percent, the lowest since October 2002. The report is set for 8:30 a.m. in Washington.
First-time claims for unemployment benefits are close to a three-year low, and consumer confidence has been rebounding as firings abate. A boost in hiring and income gains would help households keep spending, contributing to faster economic growth this year. ``The December jobs report was an aberration,'' said Michael Moran, chief economist at Daiwa Securities America Inc., whose January estimate matched the median. ``The labor market is improving. There will no longer be any doubts about the staying power of the recovery. We have a solid, sustainable expansion in place.'' Also today, the Federal Reserve may report that consumer borrowing through credit cards, auto loans and other non-mortgage lending increased by $7 billion in December after rising by $4 billion the month before, according to a survey of economists. The central bank releases that report at 3 p.m. in Washington.
Other Indicators Brighter
Federal Reserve policy makers cast doubt on the smaller-than- expected rise in December payrolls in their statement last week announcing that they voted to keep the target interest rate steady at 1 percent, the lowest since 1958. ``Although new hiring remains subdued, other indicators suggest an improvement in the labor market,'' the central bankers said. Initial claims for unemployment insurance are among the other indicators painting a brighter jobs picture. First-time applications averaged 345,300 for the four weeks that correspond with the January employment survey, the fewest since February 2001, according to Labor Department figures. That compares with an average of 362,300 for the comparable period in December and 447,300 reached in the first week of May, which was the highest in a year.
`Consumer Was Spending'
The slowdown in firings is being reflected in improving consumer confidence. The University of Michigan's sentiment gauge reached a three-year high last month, while the Conference Board's measure rose to the highest in more than a year. The percentage of people who said they found jobs difficult to get, a gauge economists say often reflects changes in the job market, dropped to 31.4 last month from 32.4 in December. That measure averaged 31.9 percent last year. ``The consumer was spending with us,'' said Terry Lundgren, chief executive of Federated Department Stores Inc., which owns Macy's and Bloomingdale's, in an interview Tuesday. ``She does that when she's feeling better about herself and her family's financial situation and job security.'' The Cincinnati-based retailer said shoppers snapped up handbags and cosmetics during the holidays, boosting sales at stores open at least a year by 1.4 percent in the fourth quarter and 5.5 percent in January.
Seasonal Adjustment Problems
Wal-Mart Stores Inc., the world's largest retailer, said yesterday that U.S. sales at stores open at least a year rose a more-than-forecast 5.7 percent in January. Neal Soss, chief economist at Credit Suisse First Boston in New York, who forecast a 150,000 increase in payrolls, is among economists who believe the job market is stronger than implied by the December report. Cautious hiring during the holidays compromised the Labor Department's ability to adjust the employment numbers for seasonal variations, according to Soss and others. For that reason, the December figure probably understated the improvement in jobs. The government expects a pickup in hiring at businesses such as retailers and restaurants in November and December as stores gear up to accommodate the usual rush of shoppers during Christmas. They adjust the payroll numbers down those months using past seasonal patterns, to make them comparable with statistics for other months. Retailers may have hired fewer workers than usual in December, resulting in the 38,000 decline reported in the adjusted payroll figures last month.
Benchmark Revisions
The reverse should be true in January. Because the Labor Department expects just as many retail jobs to be lost after the holidays, a smaller-than-usual decline will result in a seasonally adjusted increase in retail employment for January. ``Less December hiring by retailers and restaurants should translate into less January firing by these establishments, a positive swing factor,'' Soss said in a research report to clients. His forecast includes a gain of 20,000 jobs at retailers and a similar increase at leisure and hospitality businesses that includes restaurants. Surveys of purchasing executives at manufacturers and service firms point to an improvement in hiring. The Institute for Supply Management's index of factory employment has been greater than 50, signaling increased hiring, since November. A similar gauge of service employment, which accounts for 9 out of every 10 jobs, has been showing payroll growth since October.
The Labor Department is also scheduled to issue its annual benchmark revisions to employment figures today. The changes will take into account adjustments to seasonal variation calculations that will affect statistics back to 1999. The report will also add new information on the size of the labor force derived from the 2000 Census.
The economy probably lost 145,000 more jobs than thought in the 12 months ended in March 2003, according to a preliminary estimate made by the Labor Department in October of the revisions to be issued this month. The decrease results from a more complete estimate of changes in payrolls obtained from state unemployment insurance records that almost all companies file, including those recently established. That information is available only with a lag. //www.bloomberg.com