Dubai: Payrolls in January probably grew at a pace that underscores the US Federal Reserve's concern it will take years for the job market to recover from the recession, economists said before a report this week.
Employment increased by 140,000 workers this month after a 103,000 gain in December, according to the median forecast of 59 economists surveyed by Bloomberg News ahead of Labour Department data on February 4. The report may also show the jobless rate increased to 9.5 percent from 9.4 per cent.
The world's largest economy has yet to grow fast enough to make a bigger dent in unemployment, explaining why Fed policy makers are going ahead with buying $600 billion (Dh2.2 trillion) in assets. Companies like Ford Motor Co and Lowe's Cos have announced they'll hire this year to spur sales, which may signal payroll additions will accelerate in coming months.
"Companies will increase hiring as they can't keep pushing existing workforce any further," said Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts. "We'll see a gradual improvement in the labour market. The Fed will complete what it's started."
Other reports this week may show factories and service industries expanded as consumers and businesses kept spending.
The projected increase in the jobless rate would mean it has exceeded nine per cent for 21 consecutive months, the longest stretch of elevated unemployment since records began in 1948.
Economy accelerates
The economy grew at a 3.2 per cent annual rate in the fourth quarter of 2010 as consumer spending climbed by the most in more than four years, a Commerce Department report showed last week.
Another Commerce Department report may show household purchases, which account for about 70 per cent of the economy, picked up heading into this year. Personal spending rose 0.5 per cent in December as incomes climbed 0.4 per cent, according to the Bloomberg survey median.
Investors propelled retail stocks as spending improved. The Standard and Poor's Supercomposite Retailing Index climbed 26 per cent last year, while the broader S&P 500 advanced 13 per cent.
Faster growth is needed to reduce the unemployment rate, which economists surveyed by Bloomberg this month projected will average more than nine per cent this year. Hiring also must ramp up to help recoup the loss of 8.4 million jobs as a result of the worst recession since the 1930s, which began in December 2007 and ended in June 2009. For all of 2010, the US added about 1.1 million jobs, the most since 2006.
Insufficient recovery
"The economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labour market conditions," the Fed said in a statement after its policy meeting on Wednesday. "The unemployment rate is elevated."
Factories remain a key part of the expansion. The Tempe, Arizona-based Institute for Supply Management's manufacturing index, due on Tuesday, fell to 58 in January, from an eight-month high of 58.5 in December, economists projected in the Bloomberg survey. Readings above 50 signal growth.
The recovery is reflected in expansion plans at the two largest US automakers. Ford revealed three new electric or hybrid vehicles and said it may hire more than 7,000 workers in the next two years.
