2 June 2006, 15:42  U.S. jobless rate is likely to hold at 4.7%

Construction sector has created robust employment trends during recent years, but due to the fact that housing starts are falling, employment report probably fall as well. The jobless rate is likely to hold at 4.7% and non-farm payrolls are expected to rise by 165K in May. "Homebuilding is slowing and that will disproportionately impact new jobs (because the seasonal adjustment factors work to counteract large increases during the spring)," informed Roger M. Kubarych, economist at HVB Group. "We know from the weekly initial claims figures that the insured unemployment rate has gone up a tenth this month. That may be mirrored in the overall rate of unemployment, as well." He added. Mike Carey, currency strategist at Calyon stated that according to e look for non-farm payrolls to rise by 165K in May, following a below-trend 138K increase in April. "We believe that part of the soft March figures reflected holiday and seasonal distortions that depressed the retail payroll count. Our forecast runs a bit below the Q1 average gain near 185K. We would not be surprised to see soft hiring in construction but manufacturing hiring is expected to remain positive." He said.

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