PREVIEW-Stock market slump seen denting U.S. Aug payroll
WHAT: U.S. employment report for August
WHEN: Friday, Sept. 2, at 8:30 a.m. EDT (1230 GMT)
NONFARM PAYROLLS PRIVATE PAYROLLS
Median +75,000 +105,000
Minimum -25,000 -5,000
Maximum +160,000 +180,000
Prior +117,000 +154,000
UNEMPLOYMENT RATE AVG WORKWEEK AVG HOURLY EARNINGS
Median 9.1 percent 34.3 hours +0.2 pct
Minimum 9.0 percent 34.0 hours 0.0 pct
Maximum 9.2 percent 34.4 hours +0.3 pct
Prior 9.1 percent 34.3 hours +0.4 pct
FACTORS TO WATCH:
An ugly fight during negotiations to raise the nation debt ceiling, which culminated in the loss of the United States' top-notch AAA credit rating from Standard & Poor's and a tumble in stock market prices may have dampened hiring in August.
Nonfarm payrolls are expected to have increased 75,000, according to a Reuters survey, slowing from July's 117,000 rise. There is a risk that nonfarm employment even contracted this month, but analysts caution against interpreting such an outcome as a sign that the world's largest economy is back in recession.
While much of the anticipated slowdown in hiring will reflect businesses' hesitancy to add new workers after the debt ceiling debacle, payrolls will also be depressed by the strike at Verizon Communications involving 45,000 workers.
But with the 23,000 Minnesota state workers back on payrolls after a partial government shutdown in July, the overall impact of the Verizon strike on employment may be minimal. The workers have since returned to work and will be back on September payrolls.
Business confidence took a hit in August in the face of extreme turmoil on financial markets. Regional Federal Reserve bank manufacturing surveys from New York, Philadelphia to Texas all showed a collapse in confidence in August, but offered a mixed picture of factory employment.
Confidence has also been battered by fears the European sovereign debt crisis is spreading.
Hard data, ranging from industrial production to consumer spending, have shown the economy found some strength as the third quarter started after barely growing in the first half of the year.
August payrolls data could shed light on just how damaging the recent erosion of both business and consumer spending was on the economy. Even if employment comes in weak in August, the report should not be seen as a red flag for recession.
Still it will be one more sign the ailing economy is struggling to regain momentum after barely growing in the first half of the year. It could potentially be one of the factors that might force the Fed's hand.
Fighting high unemployment is top on the U.S. central bank's priority list and Fed Chairman Ben Bernanke on Friday left the door open for further monetary stimulus to aid the economy.
Although business confidence, as measured by the regional Fed manufacturing surveys, sank in August, new applications for state unemployment benefits held just above 400,000.
Jobless claims even fell 10,000 between the July and August survey periods for nonfarm employment.
Claims below 400,000 are considered as consistent with a stable labor market and data for August showed little sign of a pick-up in layoffs, leading some economists to be cautiously optimistic that hiring will accelerate in the months ahead.
Payroll growth has averaged 127,142 in the first seven months of the year, far less than the 150,000 jobs needed a month to keep pace with labor market growth.
Only 2 million of the 8.7 million jobs that were lost during the recession have been recovered. About 13.9 million Americans are unemployed and 44.4 percent of them have been out of work for six weeks or more.
The jobless rate is seen steady at 9.1 percent in August, mainly as more workers give up the hunt for work.
Since the unemployment rate is derived from a separate survey of households, it may not be affected by the Verizon work stoppage, as the striking workers are unlikely to have considered themselves unemployed and looking for work during their labor dispute.
As with previous months, the private sector will account for all the payrolls gain in August, with employers expected to have added 105,000 new jobs after hiring 154,000 workers in July.
Government payrolls are expected to have contracted for a ninth straight month as state and local governments struggle to balance their budgets. But the decline may not be as steep as in the past three months following the end of the Minnesota state government shutdown.
Government employment has declined every month since June last year, with the exception of October when payrolls increased 28,000.
Within the private sector, most of the job gains are likely to be in the services sector. Payrolls in the information sector will be hit by the Verizon strike, while jobs in finance will shrink again, reflecting a recent wave of layoffs.
Manufacturing job growth is likely to have been curbed by the slump in business confidence after adding 24,000 new positions in July as the disruptions to motor vehicle production caused by the shortage of parts from Japan eased.
The employment report is also expected to show the average workweek unchanged at 34.3 hours and with average hourly earnings rising 0.2 percent after posting their largest increase since November 2008 in July. (Polling by Bangalore unit; reporting by Lucia Mutikani; Editing by Neil Stempleman)
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