BLBG: Employment Probably Picked Up Entering 2011 as U.S. Economy Strengthened
Employment in the U.S. probably picked up in December, raising the odds the world’s largest economy will continue to strengthen in 2011, economists said before a report today.
A projected 150,000 gain in payrolls, the median forecast of 78 economists surveyed by Bloomberg News, would follow a 39,000 November increase and bring the total advance for last year to 1.1 million. The unemployment rate dropped to 9.7 percent from 9.8 percent, the survey showed.
More jobs and bigger paychecks may continue to lift sales, giving companies like Dollar General Corp. reason to keep adding workers and helping sustain the recovery. At the same time, the pace of progress signals it will take years to recover the 8.4 million jobs lost due to the recession, underscoring why the Federal Reserve is pumping more money into the economy.
“There’s reason for businesses to be a little more optimistic,” David Resler, chief economist at Nomura Securities International Inc. in New York, said in an interview with Bloomberg Television this week. “Businesses will be hiring if they think that hiring is going to increase their bottom line.”
The Labor Department’s figures are due at 8:30 a.m. in Washington. Survey projections for the increase in payrolls ranged from 98,000 to 240,000. The median climbed from 140,000 at the start of the week after an estimate from ADP Employer Services showed companies boosted employment by 297,000 workers last month.
Bernanke on Economy
The data will be out one hour before Fed Chairman Ben S. Bernanke is scheduled to testify before the Senate Budget Committee on monetary and fiscal policy and the economic outlook.
Private payrolls, which exclude government agencies, rose by 175,000 last month, the best performance in eight months, the survey showed.
Retailers and automakers are among industries hiring.
Dollar General, the biggest of the U.S. dollar discount stores, plans to add 6,000 jobs as it opens 625 more stores in fiscal 2011. The Goodlettsville, Tennessee-based company said it will have created 15,000 jobs from 2009 through 2011.
Ford Motor Co., the world’s most profitable automaker, is hiring 1,800 workers and spending $600 million to overhaul a factory in Louisville, Kentucky, to build small sport-utility vehicles, Marcey Evans, a Ford spokeswoman, said in an interview last month.
‘Cautiously Optimistic’
“While it appears that the economic environment has stabilized and is perhaps improving, persistent high unemployment and uncertainty in the economy could continue to pressure consumers and affect their spending,” Steven Temares, chief executive officer at Union, New Jersey-based Bed Bath & Beyond Inc., said on a teleconference with analysts Dec. 22. Still, “we remain cautiously optimistic,” he said.
Consumer spending, which accounts for about 70 percent of the economy, has picked up. Holiday purchases rose 5.5 percent, the best performance since 2005, said MasterCard Advisors’ SpendingPulse, which measures retail sales by all payment forms. That compared with a 4.1 percent gain a year earlier. The numbers include Internet sales and exclude automobile purchases.
Indications the economy was improving and rising corporate earnings helped fuel gains in the stock market last year. The Standard & Poor’s 500 Index rose 13 percent in 2010 after a 23 percent jump in 2009, making it the biggest two-year advance since the Internet-bubble rally of 1998 and 1999.
28-Year High
December is forecast to be the 17th month in which unemployment has been 9.5 percent or higher, showing that the pickup in hiring hasn’t been strong enough to reduce joblessness. For all of 2010, the jobless rate likely averaged 9.7 percent, the highest since 1982.
With today’s report, the Labor Department will also revise figures from its household survey used in calculating the unemployment rate going back five years. Benchmark revisions to the payroll data will be announced in February.
Employment at government agencies is projected to drop as states and municipalities grappling with budget gaps trim spending and reduce headcount. Florida may cut 5 percent of its state workforce to save costs, Governor-elect Rick Scott said in an interview Dec. 3 on Bloomberg Television’s “InBusiness With Margaret Brennan.”
High unemployment explains why Fed policy makers said they need to follow through on their plan to purchase an additional $600 billion in Treasury securities by June.
“The economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment,” officials said in a statement after their Dec. 14 meeting.
The struggling labor market is also a reason why President Barack Obama last month signed an $858 billion bill extending all Bush-era tax cuts for two years. The bill also continues expanded unemployment insurance benefits through 2011 and cuts payrolls taxes by 2 percentage points.
