U.S. Employers Probably Added Fewer Workers
Employers probably hired fewer workers in May, a sign U.S. businesses are losing confidence as the world's largest economy cools, economists said before a report today.
Payrolls rose by 165,000, the smallest gain in four months, after increasing 244,000 in April, according to the median of 89 estimates in a Bloomberg News survey. The jobless rate may have partially reversed April's advance, falling to 8.9 percent from 9 percent.
Companies may try to restrain labor costs amid concern consumer spending, which accounts for about 70 percent of the economy, will keep slowing as households grapple with rising food and fuel expenses. The recovery's failure to create more jobs raises the odds Federal Reserve policy makers will hold interest rates close to zero into next year.
"The economy has slowed, and employment has slowed as well," said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. Policy makers will "continue emphasizing that they'll keep interest rates on hold for a very long time."
The Labor Department's data are due at 8:30 a.m. in Washington. Bloomberg payroll survey estimates ranged from increases of 65,000 to 250,000. Projections in the Bloomberg survey for the unemployment rate ranged from 8.7 percent to 9.1 percent.
Treasuries Rise
In addition to companies, investors may be losing confidence in the speed of the economic expansion. The Standard & Poor's 500 Index has dropped 3.7 percent since the end of April.
Treasuries rose before the report, headed for a third consecutive weekly advance. Ten-year yields were two basis points lower at 3.02 percent as of 9:13 a.m. in London, according to Bloomberg Bond Trader prices. The Stoxx Europe 600 Index was little changed at 274.60.
Private payrolls, which exclude government positions, grew 175,000, according to the survey median. Manufacturing employment gains probably slowed to 10,000 after a 29,000 increase in April, the figures may show.
Manufacturing grew in May at the slowest pace in more than a year, according to Institute for Supply Management data this week, reinforcing concern the industry that led the U.S. recovery is cooling. Consumer spending grew less than forecast in April as households felt the pinch of grocery and energy costs, a Commerce Department report showed.
Fed Response
Economic growth slipped to a 1.8 percent annual pace in the first three months of the year from 3.1 percent in the prior quarter, revised figures from the Commerce Department showed last week.
Economists including Feroli said the wave of weak economic data may spur Fed policy makers to support growth by making it clear after their June meeting they're in no hurry to shrink the central bank's record balance sheet. The Fed's second $600 billion round of asset purchases ends this month, and it may keep reinvesting proceeds from maturing debt, they said. The Fed next meets June 21-22.
"The current accommodative stance of U.S. monetary policy continues to be appropriate because the unemployment rate remains elevated and inflation is expected to remain subdued over the medium run," Fed Vice Chairman Janet Yellen said in a Tokyo speech this week.
Factory Closures
Companies still reducing their workforce include H.J. Heinz Co., the world's biggest ketchup maker, which in May announced plans to slash as many as 1,000 jobs worldwide and close five factories. Dean Foods Co. (DF), the largest U.S. milk processor, said it cut 600 positions last quarter and 140 early this quarter.
At the same time, jobs are being created as some businesses expand. General Electric Co. (GE)'s finance unit in May said it will add 1,000 people to its Chicago-area operations, mostly new hires, as commercial lending improves in the Americas. About 500 will be hired in 2012, with another 500 over the next several years, Fairfield, Connecticut-based GE said. The company also announced last month that it will open a locomotive plant employing more than 500 people in Fort Worth, Texas.
"Job creation remains the most important factor during the economic recovery, but we do anticipate that it's continuing to improve," Don Johnson, vice president of U.S. sales at General Motors Co. (GM), said on a June 1 teleconference. "The environment for future hiring and investment does continue to be positive."
Bloomberg Survey ============================================================== Nonfarm Private Manu Unemploy Payrolls Payrolls Payrolls Rate ,000's ,000's ,000's % ============================================================== Date of Release 06/03 06/03 06/03 06/03 Observation Period May May May May -------------------------------------------------------------- Median 165 175 10 8.9% Average 160 169 8 8.9% High Forecast 250 275 25 9.1% Low Forecast 65 75 -15 8.7% Number of Participants 89 50 24 85 Previous 244 268 29 9.0% -------------------------------------------------------------- 4CAST 85 90 --- 9.0% ABN Amro 200 220 --- 8.9% Action Economics 165 --- 5 8.9% Aletti Gestielle 200 233 25 8.9% Ameriprise Financial 130 140 2 9.0% Banesto 215 --- --- --- Bank of Tokyo- Mitsubishi 165 180 --- 8.9% Barclays Capital 190 210 15 8.9% Bayerische Landesbank 175 --- --- 8.9% BBVA 210 225 --- 9.0% BMO Capital Markets 170 --- --- 9.0% BNP Paribas 75 100 --- 9.1% BofA Merrill Lynch 125 145 --- 9.0% Briefing.com 140 160 --- 9.1% Capital Economics 150 --- --- 8.9% CIBC World Markets 165 --- 0 9.0% Citi 100 185 5 9.0% ClearView Economics 250 275 25 8.9% Commerzbank AG 200 --- --- 9.0% Credit Agricole CIB 80 --- --- 9.1% Credit Suisse 120 135 --- 8.9% Daiwa Securities America 190 --- --- 8.9% Danske Bank 180 --- --- --- DekaBank 180 --- --- 8.9% Desjardins Group 170 --- --- 9.0% Deutsche Bank Securities 160 185 --- 8.9% Deutsche Postbank AG 180 --- --- 8.9% Exane 180 --- --- 8.9% Fact & Opinion Economics 170 200 --- 8.9% First Trust Advisors 90 110 -10 8.9% FTN Financial 150 --- --- 8.9% Goldman, Sachs & Co. 100 --- --- 8.9% Helaba 180 --- --- 8.9% High Frequency Economics 200 75 --- 8.9% HSBC Markets 210 230 --- 8.9% Hugh Johnson Advisors 190 --- 15 8.9% Ibersecurities 250 --- --- --- IDEAglobal 160 175 10 9.0% IHS Global Insight 135 150 --- 9.0% Informa Global Markets 130 --- 15 8.9% ING Financial Markets 100 120 15 8.9% Insight Economics 200 --- --- 9.1% Intesa-SanPaulo 180 --- --- 8.9% ITG Investment Research 175 190 --- --- J.P. Morgan Chase 175 190 5 8.9% Janney Montgomery Scott 136 153 0 9.0% Jefferies & Co. 205 225 10 8.9% Landesbank Berlin 125 --- --- 8.9% Landesbank BW 220 --- --- 8.8% Laurentian Bank 110 120 --- 9.0% Manulife Asset Management 165 --- 11 8.9% Maria Fiorini Ramirez 75 95 --- 8.9% MET Capital Advisors 210 --- --- 9.0% MF Global 90 170 -15 8.9% Mizuho Securities 175 --- --- 9.0% Moody's Analytics 80 100 10 9.0% Morgan Keegan & Co. 146 --- --- 9.0% Morgan Stanley & Co. 175 --- --- 9.0% National Bank Financial 250 --- --- 8.8% Natixis 130 --- --- 8.9% Newedge 145 160 --- 8.9% Nomura Securities 85 110 -10 9.0% Nord/LB 220 230 20 8.9% OSK Group/DMG 160 --- --- 8.8% Paragon Research 160 --- --- 9.0% Parthenon Group 169 189 --- 8.9% Pierpont Securities 175 195 --- 8.9% PineBridge Investments 200 245 --- 8.8% PNC Bank 135 150 10 8.9% Prestige Economics 160 190 --- 8.9% Raiffeisenbank International 200 220 --- 8.9% Raymond James 190 220 --- 8.9% RBC Capital Markets 190 207 --- 9.0% RBS Securities 150 175 --- 8.9% Scotia Capital 125 --- --- 8.9% SMBC Nikko Securities 130 150 --- 9.1% Societe Generale 160 180 --- 8.7% Standard Chartered 65 85 --- 9.0% State Street Global Markets 116 118 7 9.0% Stone & McCarthy Research 100 115 0 8.9% TD Securities 165 185 --- 9.0% UBS 125 150 --- 9.0% UniCredit Research 185 --- --- 9.0% Union Investment 200 --- --- 9.0% University of Maryland 200 220 10 8.9% Wells Fargo & Co. 130 --- --- 8.9% WestLB AG 210 --- --- 8.9% Westpac Banking Co. 170 --- --- 9.0% Wrightson ICAP 150 170 --- 8.9% ==============================================================
