U.S. jobs growth likely to be relatively strong in June

WASHINGTON Mon Jun 30, 2014 4:37pm EDT

Job seekers listen to a presentation at the Colorado Hospital Association health care career fair in Denver April 9, 2013. REUTERS/Rick Wilking

Job seekers listen to a presentation at the Colorado Hospital Association health care career fair in Denver April 9, 2013.

Credit: Reuters/Rick Wilking

WASHINGTON (Reuters) - U.S. employers likely maintained a fairly healthy pace of hiring in June, consistent with data that have suggested a sharp economic contraction in the first-quarter was an aberration.

Nonfarm payrolls probably increased 212,000, marking the fifth consecutive month of job gains above 200,000, according to a Reuters poll of economists. That, together with signs of a housing recovery, would cement views that growth has rebounded.

"The economy is certainly headed in the right direction," said Millan Mulraine, deputy chief economist at TD Securities in New York. "While the momentum in the labor market has shifted modestly lower from the last two months, it's still quite strong."

The economy, which has regained the 8.7 million jobs lost during the recent recession, buckled under the weight of an unusually cold weather in the first quarter, with GDP contracting at a 2.9 percent annual pace.

A slow pace of inventory accumulation by businesses and the expiration of long-term unemployment benefits and food stamps also took a toll.

But those temporary factors are fading. Factories are humming and even the housing market is regaining its footing after taking a hit from last year's jump in mortgage rates.

The Labor Department will release its monthly jobs report at 8:30 a.m. EDT (1230 GMT) on Thursday. U.S. financial markets are closed on Friday for the Independence Day holiday.

UPWARD SURPRISE

With new weekly applications for jobless benefits holding below 320,000 since mid-May and other measures of employment improving through June, payrolls could surprise on the upside.

The unemployment rate is forecast to remain at a 5-1/2 year low of 6.3 percent. But with college graduates expected to enter the labor market as they normally do in June, the labor force could increase and result in the jobless rate ticking-up.

A combination of job gains and a shrinking labor force have lowered the unemployment rate from a peak of 10 percent in October 2009.

The decrease in labor force participation partly reflects the aging of the U.S. population, but Federal Reserve Chair Janet Yellen has argued it is also due to discouraged job seekers who could be enticed back into the workforce.

Yellen has said that is one reason for the U.S. central bank to maintain its extraordinarily easy monetary policy. She also has pointed to the unusually large number of Americans who are either suffering a long spell of unemployment or working part-time because they are unable to find full-time work as suggesting a lot of slack remains in the labor market.

"That will come back to haunt us with a delayed pivot in Fed policy," said Robert Dye, chief economist at Comerica in Dallas. "I am concerned that the Yellen Fed will be late to pivot and consequently we run the risk of overheating later on."

The June data will likely follow the recent pattern of job gains across all sectors. Construction and manufacturing employment is forecast to accelerate, reflecting recent improvements in housing and a pickup in factory activity.

A slight moderation is expected in payrolls growth for services industries as retail employment continues to cool.

The length of the workweek is forecast steady at 34.5 hours, while average hourly earnings likely rose 0.2 percent.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

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Comments (3)
sspider wrote:
To bad they don’t differentiate between high pay and minimum wage. How many of these new jobs are paying a living wage? Most of these new jobs are probably at the bottom of the spectrum.

Jun 30, 2014 5:56pm EDT  --  Report as abuse
Simplerman wrote:
The photo says it all.

I do applaud whoever chooses the photos.

Jun 30, 2014 7:37pm EDT  --  Report as abuse
Duffminster wrote:
As usual, the normal green shoots spin. But those temporary factors are fading. Factories are humming and even the housing market is regaining its footing after taking a hit from last year’s jump in mortgage rates.

First of all whatever statistically insignificant increase in jobs we see doesn’t make up for the fact that the new jobs are paying so much less than those lost during the recession with so many being temporary, part time or in the service, leisure or retail sectors.

Factories humming? The Chicago PMI tumbled in June to 62.5, its biggest miss in 3 months. This is the biggest headline drop since March as inventories rose, order backlogs fell, and new orders fell.

As far as housing, yes, there was a bit of jump between April and May but this is the 8th month in a row of a year-over-year drop in home sales and the trend remains negative. This is compounded by the fact that its mostly the more expensive homes that have been rising while the medium and the low end of the markets are performing poorly. This reflects the growing income and wealth inequality. Median household income is around $50,000 but the median home prices is about $220,000. That means it takes over 4 times household income to buy a new house. Most financial advisers indicate that the maximum should be 2.5 household income. The US economy just isn’t generating high paying jobs at a rate even near close enough to increase home ownership among first time home buyers and middle class families. Its mostly been all cash purchases by the new breed of Wall Street slum lords who buy all the good deals and turn them over as rentals. On top of that there is real inflation that the Bureau of Labor Statistics and the Fed are not reporting, namely in food, engery, tuition, health care, tuition, rent and other factors that are being reflected in slowing growth in consumer spending that will take a byte out of Q2 and Q3, Q4 consumer spending which accounts for about 70% of the US GDP.

Exports and the trade deficit continue to worsen as growth in the global economy continues to slow.

All that said, I’d say that the following stock phrase from the article above is definitely green shoots spin:

“…But those temporary factors are fading. Factories are humming and even the housing market is regaining its footing after taking a hit from last year’s jump in mortgage rates. …”

Jun 30, 2014 8:32pm EDT  --  Report as abuse
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