“Favorable readings from multiple indicators buoyed expectations for Friday’s jobs report, stirring hopes that the economy’s momentum at last is spreading to the labor market.
Economists’ median forecast for December payrolls climbed to 200,000 from 191,000, in the Dow Jones Newswires survey. The revision came after Wednesday’s ADP National Employment Report said that private businesses added 238,000 jobs in the final month of 2013. Expectations held steady for the unemployment rate, now 7.0%. Reports Thursday that both layoffs and claims for jobless benefits eased at year-end kindled optimism for the report to be released Friday by the Labor Department.
- Bloomberg News
“What’s happening is the economy is generating some momentum,” said Ward McCarthy, chief financial economist ofJefferies LLC. “We’re seeing the effects of that accelerated growth on the labor market.” He pointed to the 4.1% growth in third-quarter gross domestic product, and said fourth-quarter GDP — the advance estimate will be released in three weeks — could come in around 3%.
December’s reading will signal whether the labor market’s strength late last year is enduring. Since September, U.S. employers have added an average of 193,000 positions a month. The unemployment rate declined almost a full percentage point throughout 2013 — nearly twice the 0.5 percentage-point decline during 2012. The drop reflects good news and bad news. While some job-seekers found new positions, others gave up and left the work force. Those exits from the work force — along with the effects of an aging population — are seen in the labor-force participation rate, which, at 63.0, is three percentage points below its prerecession level.
The Labor Department report also is a critical benchmark for Federal Reserve policy makers, whose January meeting will focus on the central bank’s bond-buying stimulus. Minutes from the panel’s December meeting, released Wednesday, showed agreement on the decision to reduce the purchases by $10 billion, to $75 billion, starting this month. Fed policy makers have said they expect to dial back the program steadily in 2014, as long as the economy looks strong enough to progress without such support.
All told, the U.S. is about 1 million jobs away from recouping the roughly 9 million positions lost during and after the recession.
Economists in the most recent Wall Street Journal survey forecast on average that in 2014 the U.S. will add almost 198,000 jobs a month — the highest estimate since 2005, when the survey first posed the question. Such a pace would put the country on track to return to prerecession job levels before July.
However, when one factors in steady population growth, it would take the U.S. until April 2019 to reach where it would have been without the recession’s toll. If labor-market gains accelerate to a pace of 250,000 jobs a month, the U.S. would reach that point sooner, in August 2017. (Note that monthly job gains most recently notched such a pace in 1999.)
Returning to net payroll growth for the first time since January 2008 “doesn’t mean the labor market will be back to normal but it’s a major step along the way to normalcy,” Mr. McCarthy said…..”
Actual job creation came in at +74k jobs. The unemployment rate dropped to 6.7%. The participation rate falls to a new low….
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