U.S. employers probably added a quarter-million workers to payrolls in June, helping fuel income growth and the economy, according to a survey before today's Labor Department report. The unemployment rate is seen holding at 5.6 percent. The expected rise in payrolls is based on the median of 73 forecasts in a Bloomberg News survey and would follow an increase of 248,000 in May. The report is set for 8:30 a.m. in Washington. ``If you look at the labor force, it's been growing slower during the early stages of the expansion,'' said Anthony Chan, chief economist at Banc One Investment Advisors in Columbus, Ohio. ``Now the labor force is starting to grow fast'' and may be creating enough jobs to start lowering the unemployment rate.
The gain would bring the total number of jobs created so far this year to 1.4 million, the best six months of employment growth since December 1999 to May 2000. The Federal Reserve this week raised the benchmark U.S. interest rate for the first time in four years, citing ``solid'' growth and ``improved'' job conditions. The central bankers said more rate increases can come at a ``measured'' pace because inflation will probably stay low. The Commerce Department is expected to report that factory orders fell for the second month in a row. Factory orders probably declined 0.7 percent in May after dropping 1.7 percent during April, according to the median of economists' forecasts. That report is scheduled for 10 a.m. in Washington.
Presidential Politics
The job growth has yet to bolster President George W. Bush's job approval rating ahead of the November election. The rating remained near a low for his term, leaving him in a statistical tie with Democratic challenger John Kerry, according to a New York Times/CBS News poll released Wednesday. The poll showed 40 percent of those surveyed approved of how Bush is handling the economy, compared with 52 percent who disapproved. ``I'm not surprised that the politics are tight here, even though the economy is clearly improving,'' said David Kelly, an economic adviser at Putnam Investments in Boston in an interview Tuesday. Consumers ``spent the income-tax refunds. The refinancing is gone. They are waiting for the wage gains.''
Average hourly earnings probably rose 0.3 percent last month, matching the increase in each of the previous two months, according to the median estimate of economists surveyed. The expected gain would boost hourly wages by 2.3 percent over the past 12 months compared with a 2.2 percent year-over-year increase in May. As recently as February, the 12-month increase in hourly wages was 1.6 percent, matching the smallest gain since record keeping began in 1965. May's projected year-over-year rise would be almost a percentage point lower than the average 3.2 percent year-over-year increase during the past two decades.
Hiring Plans
Thirty percent of U.S. employers plan to add workers from July through September, the most since the last three months of 2000, according to a survey issued earlier this month by Manpower Inc. The result, based on a survey of 16,000 employers, compares with 28 percent in the second quarter and 20 percent in the first, according to Manpower, the world's No. 2 supplier of temporary staff by revenue, behind Switzerland's Adecco SA. Union Pacific Corp., owner of the largest U.S. railroad, said last month it intends to hire 5,000 train-crew workers, 800 more than its previous plan, to help end delays that forced the company to turn away shipments and reduced profit. As of June 17, about 2,000 of the new train-crew workers had been hired, Chief Executive Richard Davidson said at a Merrill Lynch transportation conference that day.
Factory Employment
The gain in payrolls last month is likely to be paced by the creation of 30,000 more manufacturing jobs, according to the median estimate of economists surveyed. The increase would be the fifth straight rise, making it the longest stretch of increases since an eight-month string concluded in March 1998. By boosting wages, more jobs may make it possible for consumers to keep spending as interest rates rise. ``We see the economy as quite strong,'' said Van Jolissaint, a senior economist at DaimlerChrysler AG's Chrysler, said in an interview Wednesday. ``We think we're up relative to last year with the strong economy and the waning effects of tax refunds, but job growth is kicking in pretty strongly.'' Jolissaint expects car and light truck sales this year to exceed the 16.7 million reached in 2003. Consumer spending, which accounts for 70 percent of the economy, is likely to expand 3.8 percent this year, the most in five years, following a 3.1 percent increase in 2003, according to the median estimate in a separate survey of economists by Bloomberg News last month. That will help the economy grow 4.6 percent this year, the most in two decades, according to the survey. ///www.bloonberg.com