January 31, 2012 / 11:15 PM / 7 years ago

Job growth seen slower in January

WASHINGTON (Reuters) - Employment growth probably slowed in January as messengers hired during the busy holiday shopping season were laid off, but the improving labor market trend should remain intact.

Nonfarm payrolls rose 150,000 after increasing 200,000 in December, according to a Reuters survey. The unemployment rate is seen holding steady at a near three year low of 8.5 percent.

The Labor Department will release the U.S. jobs figures, which set the tone for financial markets worldwide, on Friday at 8:30 a.m.

A 42,000 jump in courier jobs lifted employment in December. The government pinned the gain on strong online shopping.

“The 200,000 print last month perhaps overstated the genuine health of the labor market, but that’s not to say the labor market isn’t continuing to recover,” said Tim Quinlan, an economist at Wells Fargo Securities in Charlotte, North Carolina.

Economists will scour the data for any signs the improving trend has been broken, given an expected slowdown in economic growth that was flagged last week by fourth-quarter gross domestic product data.

The state of the U.S. labor market could help determine whether President Barack Obama gets a second term in office. It was one of the key factors that prompted the U.S. Federal Reserve to say it would probably hold interest rates near zero at least through 2014.

“Any evidence of slippage in progress towards full-employment could perhaps push the Fed closer to taking additional action”” said Millan Mulraine, senior macro strategist at TD Securities in New York.

The U.S. economy grew at a 2.8 percent annual rate in the final three months of 2011, quickening from 1.8 percent in the third quarter. However, the rebuilding of stocks by businesses accounted for two-thirds of the rise.

“If payrolls drop to 100,000, you now go to a situation where there is not enough on average to allow the labor market to improve,” said Christopher Probyn, chief economist at State Street Global Advisors in Boston.


While job growth has quickened, employment remains about 6.1 million below its pre-recession level. There are no jobs for three out of every four unemployed people and 23.7 million Americans are either out of work or underemployed.

The unemployment rate has declined for four straight months, falling a cumulative 0.6 percentage point. Part of the drop is due to unemployed workers giving up the hunt for a job, but the decrease also reflects genuine improvement.

Economists expect this improvement may have persuaded some discouraged jobseekers to return to the labor market in January, and some think this may actually drive the unemployment rate higher in January.

“It is likely that the number of jobseekers rose in January - which will partially reverse the recent decline in unemployment,” said Patrick O’Keefe, head of economic research at J.H. Cohn in Roseland, New Jersey.

It may be hard at first blush to determine exactly what is behind any move in the unemployment rate. The January household survey data will incorporate new population controls that will make month-to-month comparisons between the size of the labor force or number of employed or unemployed impossible.

Along with the new population controls, the department will release annual revisions to the payrolls data from the survey of employers and introduce new factors to adjust for seasonal fluctuations.

In an early benchmark estimate last year, it said the level of employment in March of last year was likely 192,000 higher than it had reported. The final figure comes on Friday.

In January, construction employment probably received a boost from the mild winter weather.

Manufacturing is also expected to have added more jobs, but retail employment probably slipped.

Government employment is forecast to have dropped by 20,000 jobs, with most of the losses concentrated at the local level.

Despite the anticipated slowdown in hiring, hourly earnings likely increased 0.2 percent, the same as in December.

Reporting By Lucia Mutikani; Editing by Andrew Hay

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