* Nonfarm payrolls expected to have risen 212,000 in June
* Unemployment rate forecast at 6.3 percent
* Average hourly earnings seen up, workweek steady
By Lucia Mutikani
WASHINGTON, July 3 (Reuters) - U.S. employment growth is expected to have continued at a solid clip in June, which would further dispel fears about the economy’s health and underscore its momentum heading into the second half of 2014.
Nonfarm payrolls probably increased by 212,000 jobs after rising by 217,000 in May, according to a Reuters poll of economists. It would be the first time since the technology boom in the late 1990s that employment had grown above a 200,000-jobs pace for five straight months.
The closely watched employment report on Thursday would add to robust auto sales in June and data showing a steady manufacturing expansion in suggesting a plunge in economic output in the first quarter was a weather-driven anomaly.
Gross domestic product contracted at a 2.9 percent annual rate in the January-March period, causing a sharp downgrading of growth estimates for this year. Growth in the second half of the year is forecast around a 3.5 percent pace.
“The data have not been consistent with the weak first half of the year,” said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina. “The improving labor market backdrop is supportive of firming rates of U.S. growth in the second half of the year.”
The Labor Department will release the June employment report at 8:30 a.m. EDT (1230 GMT). The report is usually released on a Friday, but the government will be closed this Friday for the Independence Day holiday.
Some economists cautioned that their forecasts could be too low after reports on Wednesday showed companies hired the most workers in 1-1/2 years in June, with small business hiring increasing for a ninth straight month.
With new applications for jobless aid trending lower and the share of businesses that cannot fill open positions rising, there is little doubt the labor market is tightening.
Still, the unemployment rate is seen holding at a 5-1/2 year low of 6.3 percent. It has declined from a peak of 10 percent in October 2009, driven by job gains and a shrinking labor force.
Federal Reserve Chair Janet Yellen has argued the drop in labor force participation partly reflects the departure of discouraged job seekers who could be enticed back into the workforce if conditions were to tighten.
Yellen has pointed to the elevated levels of long-term unemployed along with those working part-time because they are unable to find full-time employment as a reason to keep interest rates low for some time to come.
Most economists do not expect the U.S. central bank to raise rates until the middle of next year at the earliest, but some are growing anxious it could wait too long. The Fed has kept benchmark overnight lending rates near zero since December 2008.
“The unemployment rate is closing in on full employment,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “What’s the point of hanging around at zero when you are at full employment?”
Job gains in June are expected across all sectors.
Manufacturing payrolls are forecast increasing for the 11th straight month and construction jobs for the sixth.
A slight moderation is expected in payrolls growth for services industries as retail employment continues to cool.
Government employment probably rose for a fifth month in a row. 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)