Companies in the U.S. added more jobs than forecast in August, easing concern the economy was falling back into a recession.
Private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a gain of 40,000. Overall employment fell 54,000 for a second month and the unemployment rate rose to 9.6 percent as more people entered the labor force.
Stock-index futures rose as the report bolstered Federal Reserve Chairman Ben S. Bernanke’s view that the conditions are in place for a pickup in U.S. growth in 2011. Companies such as Caterpillar Inc. are boosting staff as the global economy grows, a sign some businesses see the recent slowdown as temporary and are looking toward an improving economy.
“The double-dip talk was probably misplaced,” said Maury Harris, chief economist at UBS Securities LLC in New York, who projected private payrolls would rise by 75,000. “From a historical perspective, things are still soft. The economy ought to be doing better.”
Futures on the Standard & Poor’s 500 Index gained 1.1 percent to 1,101.5 at 8:56 a.m. in New York. The 10-year Treasury note yield rose to 2.76 percent from 2.63 percent late yesterday.
Range of Projections
Projections of 55 economists for private payrolls ranged from a drop of 12,000 to a 120,000 increase. The government revised the July headcount from a prior estimate of a 71,000 gain.
Overall payrolls were forecast to drop by 105,000, the survey median showed. The decrease reflected a 114,000 decline of temporary workers hired by the government to conduct the decennial population count.
The unwinding of census employment distorts the payroll figures for months as the government dismisses workers as the count winds down. For that reason, economists say private payrolls, which exclude government jobs, are a better gauge of the state of the labor market.
Economists surveyed projected the jobless rate would rise to 9.6 percent from 9.5 percent in July.
Manufacturing payrolls decreased by 27,000, more than the survey forecast of a 10,000 increase, after gaining 34,000 the previous month.
‘Cautious About Hiring’
“We’re always cautious about hiring, because we want to be absolutely certain that this isn’t some temporary growth that we see,” George Buckley, chief executive officer at 3M Co. said in an interview on Bloomberg Television from Cernobbio, Italy earlier today. St. Paul, Minnesota-based 3M is a maker of 55,000 products from dental implants to Post-It Notes.
Employment at service-providers decreased 54,000. Construction companies added 19,000 workers, the first gain in four months, and retailers cut 4,900 workers.
Average hourly earnings rose 0.3 percent to $22.66 from $22.60 in the prior month, today’s report showed.
Government payrolls decreased by 121,000. State and local governments reduced employment by 10,000, while the federal government lost 111,000 jobs.
The average work week for all workers held at 34.2 hours.
The so-called underemployment rate — which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking — increased to 16.7 percent from 16.5 percent.
The report also showed long-term unemployment dropped. The number of people unemployed for 27 weeks or more fell as a percentage of all jobless to 42 percent from 44.9 percent.
The number of temporary workers increased 16,800. Payrolls at temporary-help agencies often slows as companies seeing a steady increase in demand take on permanent staff.
The U.S. economy grew at a 1.6 percent annual pace in the second quarter after expanding at a 3.7 percent rate in the first three months of the year and 5 percent at the end of 2009.
Some manufacturers are shedding workers. Northrop Grumman’s shipbuilding unit last month announced 292 job cuts, with plans to slash another 350 by the end of the year, and United Technologies Corp.’s Pratt & Whitney jet engine unit will trim 129 hourly employees in Connecticut.
Voters are increasingly skeptical of the Obama administration’s economic policies heading into November elections that will determine which political party leads congress.
“Our most urgent task is to restore our economy and put the millions of Americans who have lost their jobs back to work,” Obama said in a speech this week declaring the end of the U.S. combat mission in Iraq. “This will be difficult. But in the days to come, it must be our central mission as a people.”
The White House has been considering payroll tax relief to encourage new hiring, more tax breaks for small businesses and new infrastructure spending, according to two congressional aides familiar with the discussions who spoke on condition of anonymity because the talks are preliminary. Obama is scheduled to speak about the employment report at 10 a.m. Washington time.
The 650,000 increase in payrolls in the seven months through July shows it’ll take years to recoup the 8.4 million jobs lost during the recession that began in December 2007, the biggest employment slump in the post-World War II era.
Unemployment, which reached a 26-year high of 10.1 percent in October 2009, will average more than 9 percent through 2011, according to a Bloomberg survey.
“The painfully slow recovery in the labor market has restrained growth in labor income, raised uncertainty about job security and prospects, and damped confidence,” Bernanke said in a speech in Jackson Hole, Wyoming, on Aug. 27.
State and local government cutbacks in the face of mounting budget deficits are aggravating the problem. The number of workers employed by state and local agencies fell in July to the lowest levels since 2007. Miami, the seat of Florida’s most- populous county, on Aug. 31 imposed $76.9 million of salary, health-insurance and pension cuts on city employees to address a budget gap.
Peoria, Illinois-based Caterpillar, the world’s largest construction equipment maker, said last month it may add as many as 9,000 workers worldwide this year as sales climb in developing markets.