PREVIEW-Stock market slump seen denting U.S. Aug payroll

Tue Aug 30, 2011 2:22pm EDT

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 WHAT: U.S. employment report for August
 WHEN: Friday, Sept. 2, at 8:30 a.m. EDT (1230 GMT)
 REUTERS FORECASTS:
                   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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