U.S. employers may have added 225,000 workers in May, a ninth straight monthly increase, helping boost incomes as Americans pay record prices for gasoline. The unemployment rate probably held at 5.6 percent. The expected rise in jobs is based on the median of 72 forecasts in a Bloomberg News survey. The gain would follow an increase of 288,000 in April, capping the best three months of job growth since early 2000 and bringing the total number of new jobs so far this year to more than 1 million.
The additional employment will help sustain consumer spending and ensure the economy continues the momentum created by tax cuts and home refinancings fueled by low interest rates, said Ethan Harris, chief economist at Lehman Brothers Inc. in New York. ``The job pickup has come right in the nick of time,'' said Harris, who forecast a rise of 230,000 jobs for May. Employment gains provide ``a more steady source'' of disposable income, he said. ``The consumer can now survive without the gimmicks.'' Estimates in the Bloomberg survey range from gains of 144,000 to 300,000. The Labor Department is scheduled to issue the jobs report at 8:30 a.m. Washington time.
Help for Bush?
The increase in jobs doesn't guarantee a boost in President George W. Bush's approval ratings, which have been hurt by an erosion of confidence brought on by higher energy prices and doubts about the war in Iraq. ``Voters don't feel as good about the economy as the numbers suggest,'' said Tom Gallagher, a Washington-based political analyst for International Strategy and Investment Group Inc., a Wall Street consulting firm. ``The negative assessment of the Iraq policy is tainting his handling of the economy.'' In a CBS News poll of 1,113 adults on May 20-23, 57 percent said they disapproved of Bush's performance on the economy, and 65 percent said the country was on the ``wrong track,'' the worst showing by a president since November 1994, during the first administration of Democrat Bill Clinton. Republicans regained control of the U.S. House and Senate for the first time in 42 years in that month's elections. It takes months for good news on the economy to sink in with voters, said Marc Sumerlin, managing director at the Lindsey Group, an investment consulting firm in Fairfax, Virginia.
$2 Gasoline
``The economy has entered a sustainable expansion,'' Sumerlin said. ``High gas prices hurt, even though not as important economically as job gains. They can cause delay in realization of the jobs news picture.''
The price of crude oil rose to a record $42.45 a barrel in New York on Wednesday amid heightened concerns that terrorism would disrupt Middle East supplies. The average price of a gallon of gasoline at the pump rose to a record $2.104 in the week ended May 24, according to Department of Energy data. Voters' attitudes in the polls contrast with those of executives such as Patricia Russo, chief executive of Lucent Technologies Inc., the biggest U.S. telephone-equipment maker. ``There is an increasing sense of positive sentiment about the economy, the improvements in the economy, and the implications that has for business,'' Russo said in an interview yesterday. ``We see opportunities for growth.''
Hiring Plans
Twice as many chief executives said their companies would hire workers in the next six months than said they would eliminate staff, according to the results of a quarterly survey issued Wednesday by the Business Roundtable, a 150-member association of business leaders. Of the 116 executives polled, 38 percent predicted hiring would rise while 19 percent expected to cut jobs. ``We waited as long as we could to start hiring again, just to make sure it was sustainable, but the backlog of orders was growing significantly,'' said Fred Ouweleen, president of Pacific Miniatures, a Fullerton, California-based maker of airplane models for commercial carriers. The company has expanded its payroll by 16 percent in the last six months.
Frontier Airlines Inc., a low-fare airline based in Denver, probably will boost its payroll to about 6,000 from 4,300 in the next four years as it expands service, said Chief Executive Jeff Potter. ``We're out of space at our main office,'' Potter said in an interview. ``It's a good sign.''
Manufacturing Jobs
Turck Inc., which makes sensors for automated manufacturing lines, plans to add 75 workers to its 435-member workforce, Chief Executive Bill Schneider said in an interview. The Plymouth, Minnesota-based company had a 21 percent increase in first- quarter revenue, compared with a year earlier. Today's report is forecast to show manufacturing employment in May rose by 20,000 workers following a 21,000 increase the previous month, according to the median estimate of economists surveyed. Prior to February, manufacturing employment had dropped for 42 consecutive months. A survey of manufacturing purchasing managers released Tuesday by the Institute for Supply Management showed the group's index approached a two-decade high last month as increased demand prompted more producers to hire than at any time in the last 31 years. A pickup in manufacturing jobs may help Bush, 57, in such industrial states as Ohio, which political analysts say will be among the 17 most competitive states in the November election.
Income Gains
A Cleveland Plain-Dealer poll of 1,500 registered voters conducted May 20-25 gave Bush a 6 percentage point lead over Democratic challenger John Kerry, a 60-year-old four-term senator from Massachusetts. Other polls earlier last month showed the race even or gave Kerry a slight edge, the newspaper said. No Republican has won the presidency without carrying Ohio. The latest metropolitan area job report found that the Youngstown-Warren, Ohio, area experienced the largest year-over- year unemployment rate decline in the nation during April. Voters in Youngstown, home to many steel producers, typically vote Democratic. More hiring is leading to gains in incomes. Incomes rose 5.7 percent in the 12 months ended in April, the biggest year-over- year increase since December 2000, the Commerce Department reported last week.
Previous income figures are have been revised higher. Wages and salaries increased $57.8 billion in the fourth quarter, $18.3 billion more than first estimated, revised figures from the Commerce Department showed last month.
`Important' Revisions
Disposable income, adjusted for inflation, rose 4.9 percent in the first three months of the year, more than the 4.3 percent previously estimated. The new figures incorporated statistics from state unemployment insurance data that cover almost all businesses. The revisions suggest payroll data for the fourth quarter of 2003 may be revised higher when the government issues its updated figures early next year, said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. If the additional income was due solely to more hiring rather than increased wages for workers already employed, the revised figures suggest 150,000 jobs a month were added from October through December, according to O'Sullivan. The government previously reported that job gains averaged less than 60,000 in those three months.
``The revision to wage income has some important implications, regardless of whether it reflects more employment or income per worker,'' O'Sullivan said in a report to clients May 28. The increase suggests ``consumer spending power has been revised higher, lessening somewhat the risk of a significant weakening in spending in response to negatives such as higher interest rates and energy prices.'' Consumer spending, which accounts for 70 percent of the economy, is likely to expand at a 4.2 percent annual pace this quarter after growing 3.9 percent in the first three months of the year, according to a forecast by O'Sullivan and other economists at UBS. That will propel the economy to a 4.5 percent annualized rate of growth this quarter compared with 4.4 percent in the previous three months, according to the forecast. ///www.bloomberg.com