* Fifth month of 200,000 plus job gains in U.S. in June
* Jobs, auto sales, ISM to support Q2 rebound
* No fireworks seen from ECB meeting on Thurs
* Stability, modest growth seen from PMIs
By Philip Blenkinsop
BRUSSELS, June 29 The United States can firmly
consign its weather-beaten start to the year to history this
week with June vehicle sales and jobs data expected to show a
strong end to the second quarter.
The U.S. economy contracted at a 2.9 percent annual rate,
the sharpest decline in five years, in the Jan-March period,
figures showed last Wednesday.
An exceptionally bitter winter, the expiration of long-term
unemployment benefits and a marked slowdown in restocking by
businesses combined to drag down the world's largest economy,
but these factors should have faded by April.
Monthly jobs data, arguably the most important gauge for
both the Federal Reserve and the American people, is expected to
show U.S. firms are continuing to hire at a solid pace as a
virtuous circle of economic activity and growth takes hold.
U.S. employment already returned to its pre-recession peak
in May, with non-farm job gains of 217,000. Economists polled by
Reuters on average expect that to dip by a modest 4,000 to
213,000 in June.
That would be a fifth straight month of job gains above
200,000, a run unmatched since the Sept 1999-Jan 2000 period,
just before the dot-com bubble burst.
"If we settle at a 215-220 (thousand) pace that would be
consistent with a transition to a faster pace of growth of
around 3 percent," said Lewis Alexander, U.S. chief economist at
Alexander said he recognised risks, including rising oil
prices from the conflict in Iraq and Iraqi conflict and a
possible messy end to China's housing boom.
"An impact is possible, but I don't think all that likely.
It would have to go very badly to materially impact the U.S.
outlook," he said.
The jobs figures on Thursday, also set to feature a steady
6.3 percent unemployment rate, will conclude a shortened week
for the United States, which breaks for Independence Day on
The week will also feature auto sales, seen pulling back
slightly in June after surging in May by its strongest pace
since February 2007.
Meanwhile forecasts for the influential ISM (Institute for
Supply Management) manufacturing and services reports point to a
further acceleration of growth, with respectively a fifth and
fourth consecutive rise in the monthly indices.
James Knightley, senior economist at ING, believes the data
will support his view that growth could top an annualised 5
percent in the April-June period due to a rise of inventories, a
rebound of investment and a boost from trade.
Less optimistic economists suggest the jobs, car and ISM
reports should at least provide a counterbalance to muted
consumer spending in May, reported last week.
Such spending rose by just 0.2 percent in the month, half
the level forecast, and following a flat reading in April,
prompting some economists to cut their estimates for
second-quarter growth to as low as a 2.2 percent pace from as
high as 4.0 percent before.
NO ECB FIREWORKS
Across the Atlantic, the European Central Bank meets again,
a month on from its unleashing of a far-reaching package of
measures to keep the euro zone economy from slipping into a
The ECB cut interest rates to record lows - the deposit rate
to below zero - and strengthened its pledge to keep them low
well into the future by extending banks' unlimited access to
central bank money to the end of 2016.
It also plans to hand out more ultra-cheap long-term loans
to encourage banks to lend more freely to euro zone companies,
but the details for such operations still need to be worked out.
Overall, 27 of 53 ECB watchers polled by Reuters said the
central bank has probably done enough for now. Many among those
who disagree say a quantitative easing programme is required for
any lasting impact on the strong euro currency and inflation.
This Thursday's meeting is expected to be uneventful,
followed by what could be one of the shortest news conferences
in ECB history.
Preceding its meeting, euro zone inflation is forecast to
hold steady at 0.5 percent after its unexpected fall to that
level in May all but sealed the case for the ECB to act.
If confirmed, June would be the ninth consecutive month of
inflation in the ECB's "danger zone" of below 1 percent.
STABILITY, MODEST GROWTH
Outside the United States, purchasing managers'
indices(PMIs) steady for manufacturing on Tuesday and services
on Thursday are expected to show a picture of growth or at least
stability despite geopolitical tensions around Ukraine and Iraq.
Figures for the euro zone are seen unchanged for June, while
those for Britain are seen pulling back from very high levels of
May, when hiring in its dominant service sector matched a
In China, more comprehensive PMIs for manufacturing and
services are expected to confirm the world's second largest
economy is stabilising thanks to Beijing's measures to shore up
Factory activity expanded in June for the first time in six
months as new orders surged, according to the HSBC/Markit flash
PMI released last Monday.
(Additional reporting by Eva Taylor in Frankfurt; Editing by