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 A Reuters survey of economists forecast U.S. nonfarm payrolls
increased by 223,000 last month, matching June's job gains, a number
which would be slightly above the monthly average for the first half
of the year.
Though the pace of hiring has slowed from last year, it remains
double the rate needed to keep up with population growth. The Labor
Department will release its closely watched employment report on
Friday at 8:30 a.m. (1230 GMT)
"We expect this report to deliver a further jolt to the Fed's
confidence in their relatively optimistic economic outlook and
further solidify the bias for a September hike," said Millan
Mulraine, deputy chief economist at TD Securities in New York.
The Fed last month upgraded its assessment of the labor market,
describing it as continuing to "improve, with solid job gains and
declining unemployment."
There is, however, a lot of uncertainty surrounding July's payrolls
forecast after data vendor ADP this week reported a sharp slowdown
in private sector hiring last month, even though a gauge of services
sector employment from the Institute of Supply Management hit a
10-year high.
WAGES SEEN RISING AGAIN
Average hourly earnings are expected to have increased 0.2 percent
last month after being flat in June, putting them about 2.2 percent
above their year-ago level, but leaving them well below the 3.5
percent growth rate economists associate with full employment.
Still, the rise in wages would support views that a sharp slowdown
in compensation growth in the second quarter and in consumer
spending in June were temporary.
Wage growth has been disappointingly slow in recent months, but
falling unemployment and decisions by several state and local
governments to raise minimum wages have fueled expectations of a
pickup.
In addition, a number of retailers, including Walmart, the nation's
largest private employer, Target and TJX Cos have increased pay for
hourly workers.
NEARING FULL EMPLOYMENT
The unemployment rate is forecast to hold steady at a seven-year low
of 5.3 percent, near the 5.0 percent to 5.2 percent range most Fed
officials think is consistent with a steady but low level of
inflation.
But an expected rebound in the labor force participation rate, or in
the share of working-age Americans who are employed or at least
looking for a job, from a more than 37-1/2 year low could push it
up.
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A labor force drop that economists pinned on a seasonal quirk
accounted for a 0.2 percentage point decline in the jobless rate in
June.
A good employment report would add to robust July automobile sales
and service industries data by suggesting the economy continues to
gather momentum after growing at a 2.3 percent annual rate in the
second quarter.
"We continue to see signs that the U.S. economy is slowly, but
surely gaining traction," said Bryan Jordan, deputy chief economist
at Nationwide in Columbus, Ohio.
Employment gains in July are expected to have been concentrated in
service industries.
Construction sector payrolls likely rose also thanks to a
strengthening housing market, and factory employment will probably
get a lift as some automakers have decided to forgo a usual summer
plant shutdown for retooling.
But more layoffs in the energy sector, which is grappling with last
year's more than 60 percent decline in crude oil prices, were
probably a drag on mining payrolls.
Oilfield giants Schlumberger and Halliburton, two big oil service
companies that plan to merge, disclosed last week that they had cut
27,000 jobs between them this year. Nearly 50,000 energy jobs have
been lost in the past three months on top of 100,000 employees laid
off since oil prices started to tumble last autumn, according to
Graves & Co., a Houston energy consultancy.
(Reporting by Lucia Mutikani; editing by Clive McKeef)
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