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Economists watching jobs announcement for any signs of encouragement


 

WASHINGTON – Robust hiring in July would mark a fourth straight month of solid gains, an encouraging sign for a U.S. economy that is still struggling with high unemployment.

Economists predict that employers added 183,000 jobs — a figure that would show that businesses are growing more confident despite weak economic growth. More jobs would boost consumers’ ability to spend, allowing for stronger growth in the second half of the year.

The unemployment rate is expected to have dipped last month to 7.5 per cent from 7.6 per cent. The Labor Department will release the report at 8:30 am EDT Friday.

The Federal Reserve will pay particularly close attention to the report. Many economists think the Fed could begin scaling back its $85 billion monthly bond purchases later this year if the economy and job market continue to strengthen.

Hiring has improved this year. Employers have added an average of 202,000 a month since January, up from an average of 180,000 in the previous six months.

Yet economic growth remains sluggish. The economy grew at a subpar 1.7 per cent annual rate in April-June quarter, the government said Wednesday. While that was an improvement over the previous two quarters, it’s still far too weak to rapidly lower unemployment.

Recent data suggest that the economy could strengthen in the second half of the year.

A survey Thursday showed that factories increased production and received a surge of new orders in July, propelling the fastest expansion in more than two years. Factories also hired workers at the fastest pace in a year.

The survey, by the Institute for Supply Management, also showed that the housing recovery is spurring more output by lumber companies, furniture makers and appliance manufacturers.

Businesses have ordered more industrial machinery and other equipment for four straight months. Europe’s troubled economies are showing signs of recovery, potentially a lift to U.S. exports.

U.S. automakers are reporting their best sales since the recession, a sign that Americans are confident enough in their finances to make large purchases. Car sales rose 14 per cent in July from 12 months earlier to 1.3 million.

Healthy sales have encouraged more hiring by Ford Motor Co. The company said last week that it will hire 800 salaried professionals this year, mostly in areas such as information technology, product development and quality control.

The steady job growth this year has been supported by the comeback in the housing industry. Home prices and sales have been improving. In June, Americans bought new homes at the fastest pace in five years, a trend that could spur more construction and generate higher-paying jobs. So far this year, most of the added jobs have been in lower-paying areas, such as restaurants, bars and retail stores.

The strong job growth this year has begun to increase average pay after years of stagnation. Average hourly pay rose at an annual rate of 3.1 per cent in the April-June quarter, according to Joe Carson, an economist at Alliance Bernstein. That’s likely one reason consumer confidence has risen in recent months.


 
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Economists watching jobs announcement for any signs of encouragement

  1. US Fed has really screwed America good. So much fiat electronic counterfeit for debt has created a wall of money. Any real recovery is going to see inflation big time. And inflation will mute the recovery. In essence, any recovery is going to come with hyper-inflation.

    And the quality of jobs will be lower pay, lower benefits as costs of government, devaluing money, waste, bank corruption has zapped the USA economy good. No economics in opening a factory in say Detroit unless you get some real good long term tax breaks and the ability to whip unions into shape.

    At Obama’s rate of deficits, Obama will have more than doubled US federal debt in his term, yep, Obama will have debt-spent more than all presidents before him combined.

    All this has made USA, Canada, UK, Europe and Japan negative value economies. Sure, you get 1% returns and 1.2% growth but in a real inflation of 6% that leaves you 5% loss in value and taxed on the 1%.

    Its why after reaping some profits from the 2008 bust, (I saw it coming) in late 2009 I have been reducing investments in USA, Canada and eliminated UK/Europe investments outright. I now go offshore to non-G8 countries for better returns.

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