Employment, Manufacturing Point to Growth; U.S. Economy Preview
July 1 (Bloomberg) -- Employers created enough jobs in June to keep consumers spending and the U.S. economy expanding into the second half of the year, a report this week may show.
Another 120,000 workers found jobs last month, following a 157,000 gain in May payrolls, according to the median estimate of economists surveyed by Bloomberg News ahead of a Labor Department report July 6. A private report tomorrow is forecast to show manufacturing in June sustained the fastest pace of growth in a year.
More jobs and bigger paychecks are helping Americans cope with higher gasoline prices and falling home values, easing concern the almost six-year expansion would come to a halt. The Federal Reserve last week said inflation remains the economy's biggest risk and forecast ``moderate'' growth ahead.
``The economy continues to move forward,'' said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. ``You're not going to get any increase in the unemployment rate at all'' in coming months.
June's employment gain was enough to hold the jobless rate at 4.5 percent for a third month, according to the survey median. The rate reached 4.4 percent in March and October, the lowest since 2001.
The projected increase in payrolls compares with an average gain of 133,000 a month so far this year. Earnings per hour probably rose 0.3 percent on average last month, matching the increase in May.
Manufacturing Index
Economists forecast the Institute for Supply Management's factory index for June held at 55 for a second month, a level not exceeded since April 2006. Readings greater than 50 for the Tempe, Arizona-based, group's index signal expansion.
Lean inventories and growing demand from Europe and Asia are keeping factories humming even as the U.S. lags behind, economists said.
The ISM's index of non-manufacturing businesses, due July 5, eased to 58 for June from 59.7 the previous month, according the survey median. The projected reading would match the index's 2006 average.
``We see signs that the economy is going to remain strong,'' Jonathan Tisch, co-chairman of Loews Corp., said in a June 28 interview. ``Across the country, people are still traveling.'' Loews' subsidiaries include insurance companies, cigarette makers and hotel chains.
UAL Corp.'s United Airlines, the world's second-biggest carrier, said this month it plans to hire pilots this year for the first time since 2001 as it adds international flights. The Chicago-based carrier plans to add as many as 100 pilots in addition to recalls of furloughed employees.
Fed Meeting
The Fed's policy-making Federal Open Market Committee last week predicted a ``moderate'' pace of expansion would continue in coming quarters. It also maintained a concern that the low jobless rate would sustain price pressures and voted to hold the target for its benchmark overnight lending rate at 5.25 percent for an eighth straight meeting.
A drop in orders to factories during May raises some concern that business investment may not rebound as much as some forecast, economists said.
Orders probably fell 1.2 percent, the first decrease in four months, following a 0.3 percent gain in April, economists project a Commerce Department report on July 3 will show.
Not all economists are convinced the drop spells less corporate spending.
``It's volatile data and the underlying trend has been improving,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. ``I'm not ready to jump off the bridge.'' Bloomberg Survey
Date Time Period Indicator BN Survey Prior
07/02 10:00 June ISM Manufacturing 55.0 55.0
07/03 10:00 May Factory Orders -1.2% 0.3%
07/03 10:00 May Home Resales Pending 0.6% -3.2%
07/05 8:30 6/30 Initial Jobless Claims 315K 313K
07/05 10:00 June ISM Non-Manufacturing 58.0 59.7
07/06 8:30 June Avg. Hourly Earnings 0.3% 0.3%
07/06 8:30 June Change Nonfarm Jobs 120K 157K
07/06 8:30 June Unemployment Rate 4.5% 4.5%
To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
Another 120,000 workers found jobs last month, following a 157,000 gain in May payrolls, according to the median estimate of economists surveyed by Bloomberg News ahead of a Labor Department report July 6. A private report tomorrow is forecast to show manufacturing in June sustained the fastest pace of growth in a year.
More jobs and bigger paychecks are helping Americans cope with higher gasoline prices and falling home values, easing concern the almost six-year expansion would come to a halt. The Federal Reserve last week said inflation remains the economy's biggest risk and forecast ``moderate'' growth ahead.
``The economy continues to move forward,'' said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. ``You're not going to get any increase in the unemployment rate at all'' in coming months.
June's employment gain was enough to hold the jobless rate at 4.5 percent for a third month, according to the survey median. The rate reached 4.4 percent in March and October, the lowest since 2001.
The projected increase in payrolls compares with an average gain of 133,000 a month so far this year. Earnings per hour probably rose 0.3 percent on average last month, matching the increase in May.
Manufacturing Index
Economists forecast the Institute for Supply Management's factory index for June held at 55 for a second month, a level not exceeded since April 2006. Readings greater than 50 for the Tempe, Arizona-based, group's index signal expansion.
Lean inventories and growing demand from Europe and Asia are keeping factories humming even as the U.S. lags behind, economists said.
The ISM's index of non-manufacturing businesses, due July 5, eased to 58 for June from 59.7 the previous month, according the survey median. The projected reading would match the index's 2006 average.
``We see signs that the economy is going to remain strong,'' Jonathan Tisch, co-chairman of Loews Corp., said in a June 28 interview. ``Across the country, people are still traveling.'' Loews' subsidiaries include insurance companies, cigarette makers and hotel chains.
UAL Corp.'s United Airlines, the world's second-biggest carrier, said this month it plans to hire pilots this year for the first time since 2001 as it adds international flights. The Chicago-based carrier plans to add as many as 100 pilots in addition to recalls of furloughed employees.
Fed Meeting
The Fed's policy-making Federal Open Market Committee last week predicted a ``moderate'' pace of expansion would continue in coming quarters. It also maintained a concern that the low jobless rate would sustain price pressures and voted to hold the target for its benchmark overnight lending rate at 5.25 percent for an eighth straight meeting.
A drop in orders to factories during May raises some concern that business investment may not rebound as much as some forecast, economists said.
Orders probably fell 1.2 percent, the first decrease in four months, following a 0.3 percent gain in April, economists project a Commerce Department report on July 3 will show.
Not all economists are convinced the drop spells less corporate spending.
``It's volatile data and the underlying trend has been improving,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. ``I'm not ready to jump off the bridge.'' Bloomberg Survey
Date Time Period Indicator BN Survey Prior
07/02 10:00 June ISM Manufacturing 55.0 55.0
07/03 10:00 May Factory Orders -1.2% 0.3%
07/03 10:00 May Home Resales Pending 0.6% -3.2%
07/05 8:30 6/30 Initial Jobless Claims 315K 313K
07/05 10:00 June ISM Non-Manufacturing 58.0 59.7
07/06 8:30 June Avg. Hourly Earnings 0.3% 0.3%
07/06 8:30 June Change Nonfarm Jobs 120K 157K
07/06 8:30 June Unemployment Rate 4.5% 4.5%
To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
Labels: Bloomberg, employment, manufacturing
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