WASHINGTON (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. The report is usually released on a Friday, but the
government will be closed this Friday for the Independence Day
holiday.
TIGHTENING LABOR MARKET
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)
