Solid economic data lift hopes for Aug. job report
WASHINGTON (AP) — After a week of mostly positive economic news, analysts have forecast that the August jobs report being released Friday will show a seventh straight month of solid gains.
Economists predict that the government’s report will show that employers added 220,000 jobs in August, according to a survey by FactSet. The unemployment rate is expected to fall to 6.1 percent from 6.2 percent in July.
The Labor Department will issue the jobs report at 8:30 a.m. Eastern time.
Employers have added an average of 230,000 jobs this year, up from an average of 194,000 in 2013. The increased hiring has boosted consumers’ confidence and should support healthy growth for the second half of this year.
Most economists doubt that another strong jobs report would by itself alter Fed Chair Janet Yellen’s timetable for raising short-term interest rates. Economists generally expect Fed policymakers to start raising rates by roughly mid-2015. The short-term rate the Fed controls has been at nearly zero for almost six years.
Still, with hiring steady, Yellen and private economists are examining other measures to develop a deeper sense of the job market’s health. Yellen has said the unemployment rate, which has fallen by over a percentage point in the past 12 months, might be overstating the improvement in hiring.
Other measures that Yellen has said she monitors include: The number of people unemployed for more than six months; the number who are working part time but would prefer full-time work; and average hourly wages. Those measures remain less than healthy.
Average hourly pay has been rising at about a 2 percent annual rate — barely ahead of inflation — since the recession ended more than five years ago. That’s below the historical average of about 3.5 percent.
Still, most recent economic data have pointed to an economy that’s steadily improving.
Services firms expanded in August at the fastest pace since 2008, according to a survey by the Institute for Supply Management, a trade group of purchasing managers. The survey covers businesses that employ 90 percent of the American workforce, including retail, construction, health care and financial services firms.
Last month, services companies added jobs at the fastest pace since 2006, the institute found.
Factories expanded last month at the strongest rate in more than three years, the ISM found in a separate survey. Manufacturers said they added jobs at a healthy clip but slightly below July’s pace.
Factory output is being driven in part by auto sales. Americans bought 1.58 million cars in August, 5.4 percent more than a year earlier and the best August showing in 11 years.
Fewer Americans are also seeking unemployment benefits. Applications for benefits remained near seven-year lows last week. And the number of people who are continuing to receive benefits fell to 2.46 million, the fewest since June 2007.
In July, builders ramped up spending on construction projects by the most in more than two years, the government said this week. That is likely supporting economic growth in the July-September quarter.
And U.S. exports rose in July, narrowing the trade deficit. A smaller trade deficit can boost growth because it indicates that more of the goods and services that consumers and businesses buy were made in the United States.
The encouraging reports suggest that the economy will grow at about a 3 percent annual pace in the second half of this year. That would mark a sharp improvement from the 1.1 percent annual rate in the first half.
Still, consumer spending dipped in July, the first drop since January. That showed that Americans remain cautious despite steady job gains. Most economists expect spending to pick up as long as hiring remains healthy.