Payrolls in U.S. May Have Increased for Fifth Month, Helping Boost Wages

Payrolls in U.S. May Have Increased for Fifth Month, Helping Boost Wages

Employment probably grew in May for a fifth consecutive month, pointing to gains in wages that will help U.S. households ride out the turmoil in financial markets, economists said before reports this week.

Payrolls may have climbed by 508,000 workers last month, the biggest increase since 1997, according to the median estimate of 64 economists surveyed by Bloomberg News. The gain reflected a surge in government hiring of temporary help to conduct the census and a 180,000 rise in private employment, according to the survey.

Other reports may show the economic rebound is broadening beyond manufacturing as service providers, including retailers and construction firms, see a pickup in demand. General Electric Co. is among companies hiring, saying the European debt crisis is unlikely to derail the recovery from the worst global recession in the post-World War II era.

“The labor market is clearly improving,” said James O’Sullivan, global chief economist at MF Global Ltd. in New York. “At this point, there’s enough momentum in the economy to outweigh the drag from the turmoil in Europe.”

The Labor Department’s jobs report is due June 4. The Census Bureau had said it would take on 970,000 temporary workers from April through June to conduct the population count that occurs every 10 years. The bulk of the hiring probably took place last month.

Census Effect

Census employment may keep distorting the payroll figures for months as the government dismisses workers when the population count is done. For that reason, economists say private payrolls, which exclude government jobs, will be a better gauge of the state of the labor market for much of 2010.

The report will probably also show the unemployment rate fell to 9.8 percent last month, according to the survey median, from 9.9 percent. The rate, which reached a 26-year high of 10.1 percent in October, will take time to recede as the number of previously discouraged jobseekers returning to the labor force exceeds the number of available jobs.

Factory payrolls probably increased in May for the fifth consecutive month, according to the survey.

“This is a point in time when the world needs the U.S. to be a beacon of stability, a beacon of reliability,” GE Chief Executive Officer Jeffrey Immelt said in an interview on May 6.

Fairfield, Connecticut-based GE, the world’s largest maker of jet engines, power-generation equipment and locomotives, this month increased the number of jobs it plans to add in Michigan to more than 1,300.

Adding a Shift

Chrysler Group LLC, the automaker controlled by Fiat SpA and based in Auburn Hills, Michigan, said it will add a second shift to a Detroit factory that makes Jeep Grand Cherokees and hire 1,100 workers at the plant.

On June 1, the Institute for Supply Management’s manufacturing index may show factories continued to expand this month after growing in April at the fastest pace since 2004, according to economists surveyed. Manufacturing accounts for about 11 percent of the economy.

Two days later, Commerce Department figures may show orders placed with factories rose in April for the eighth consecutive month, according to the survey.

The manufacturing rebound has helped underpin shares. The Standard & Poor’s Supercomposite Industrial Machinery Index of 52 companies, including Caterpillar Corp. and Deere & Co., has increased 7 percent this year compared with a 2.3 percent decline in the broader S&P 500.

Shares Retreat

Since reaching a 19-month high on April 23, the S&P 500 Index has lost 11 percent on mounting concern efforts to trim government deficits in Europe will slow the global recovery.

The gains in manufacturing are now being accompanied by a rebound among service industries, which make up about 90 percent of the economy. The Tempe, Arizona-based ISM’s index of non- manufacturing businesses, due on June 3, probably rose last month to the highest level in almost four years, economists surveyed projected.

Housing is getting a boost from the extension of a buyer tax credit of as much as $8,000, figures may show on June 2. The National Association of Realtors’ index of signed purchase agreements, or pending home resales, rose in April for the third straight month, according to the Bloomberg survey.

Construction spending, due from the Commerce Department on June 1, rose 0.1 percent in April after a gain of 0.2 percent, economists projected. A slump in commercial building is restraining in the industry.

Bloomberg Survey
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Release Period Prior Median
Indicator Date Value Forecast
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ISM Manu Index 6/1 May 60.4 59.0
Construct Spending MOM% 6/1 April 0.2% 0.1%
Pending Homes MOM% 6/2 April 5.3% 5.0%
ADP Payroll ,000’s 6/3 May 32 65
Productivity QOQ% 6/3 1Q 3.6% 3.4%
Labor Costs QOQ% 6/3 1Q F -1.6% -1.5%
Initial Claims ,000’s 6/3 29-May 460 453
Factory Orders MOM% 6/3 April 1.1% 1.7%
ISM NonManu Index 6/3 May 55.4 55.7
Nonfarm Payrolls ,000’s 6/4 May 290 508
Private Payrolls ,000’s 6/4 May 231 180
Manu Payrolls ,000’s 6/4 May 44 35
Unemploy Rate % 6/4 May 9.9% 9.8%
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source: bloomberg.com