Employers probably added more workers in August and the jobless rate held at a more than four- year low, signaling a strengthening U.S. labor market that will help sustain growth, economists said before a report this week.
Payrolls rose by 180,000 following a 162,000 gain the prior month, according to the median forecast of 71 economists surveyed by Bloomberg ahead of Labor Department figures Sept. 6. Manufacturing probably cooled after expanding in July at the fastest pace in two years, other data may show.
Faster hiring and income gains will help underpin consumer spending and allow the world’s largest economy to better weather the lingering effects of higher taxes and federal budget cuts. Federal Reserve policy makers are watching the job market as they debate scaling back monthly bond purchases meant to stimulate growth and cut unemployment.
“We’re on track for a pretty solid payrolls report for August,” said Brian Jones, a senior U.S. economist at Societe Generale in New York. “It goes hand in hand with the improving economy.”
Reports last week showed a mixed picture. Gross domestic product expanded at a 2.5 percent annual rate in the second quarter, up from the 1.7 percent pace previously estimated, and the MNI Chicago Report’s measure of business activity grew in August for a fourth consecutive month. In other data, consumer spending rose less than forecast in July, and consumer sentiment dropped in August from a six-year high.
Stocks in August suffered their worst month since May 2012 as investors reacted to the possibility of an American military response to a chemical weapons attack in Syria. The Standard & Poor’s 500 Index dropped 3.1 percent last month to close at 1,632.97 on Aug. 30. U.S. exchanges are closed tomorrow for the Labor Day holiday.
The jobs report may show the unemployment rate, derived from a separate Labor Department survey of households than the payrolls tally, held in August at 7.4 percent, the lowest since December 2008, according to the Bloomberg survey.
Overall payroll gains so far this year have averaged 192,430 a month, up from 180,330 in the second half of 2012. Through July, the U.S. had recovered 6.7 million of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009.
This is the last payrolls report Fed officials will see before their Sept. 17-18 meeting. Sixty-five percent of economists surveyed by Bloomberg Aug. 9-13 said central bankers will probably decide to scale back on its bond purchases at the meeting.
Policy makers were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start reducing the $85 billion a month in asset purchases later this year if the economy improves, minutes of their last gathering showed. Central bankers had affirmed a pledge on July 31 to continue bond buying until they see signs “the outlook for the labor market has improved substantially.”
Job gains and rising home values are boosting Americans’ finances and propelling spending on big-ticket items such as automobiles, which in turn bodes well for manufacturing and further gains in employment.
Dearborn, Michigan-based Ford Motor Co., the second-largest U.S. automaker, is expanding output of its Fusion sedan to a factory in Flat Rock, Michigan, which could produce another model as demand grows. The additional shift of 1,400 new workers at the plant will boost Fusion capacity more than 30 percent.
“We expect the sales momentum to stay here in the U.S. and around the world,” Joe Hinrichs, Ford’s president of the Americas, told reporters on Aug. 29.
The Institute for Supply Management’s factory index, due on Sept. 3, dropped to 54 last month from July’s 55.4 that was the highest since June 2011, according to the Bloomberg survey median. Readings of 50 are the dividing line between expansion and contraction.
Two days later, the Tempe, Arizona-based ISM group will release its services index, which covers almost 90 percent of the economy. The gauge fell to 55 in August from a five-month high of 56, according to economists surveyed.
Some companies are trimming their workforce. Wells Fargo & Co., the biggest U.S. home lender, will eliminate 2,300 jobs in mortgage production because demand for refinancing has slumped and may drop even more as interest rates rise. Other smaller cuts were made recently around the country, according to people with knowledge of the matter, who requested anonymity because the changes hadn’t been publicly disclosed as of Aug. 22.
Among other reports this week, trade data due Sept. 4 from the Commerce Department may reflect lackluster global demand. The gap between exports and imports widened to $38.8 billion in July from the prior month’s $34.2 billion that was the smallest in almost four years, according to the Bloomberg survey median.
Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Comments that violate these standards, or our privacy statement or visitor's agreement, are subject to being removed and commenters are subject to being banned. To post comments, you must be a registered user on toledoblade.com. To find out more, please visit the FAQ.