Sturdy US em­ploy­ment gains eyed; job­less rate seen at 5.7 per­cent

The Pak Banker - - INTERNATIONAL BUSINESS/SPORTS -

US job growth likely re­mained brisk in De­cem­ber, set­ting the econ­omy up for a stronger pace of ex­pan­sion this year, even as the global econ­omy shows signs of buck­ling.

Em­ploy­ers prob­a­bly added 240,000 jobs to their pay­rolls last month after Novem­ber's out­sized 321,000 in­crease, ac­cord­ing to a Reuters survey of econ­o­mists. It would be the 11th con­sec­u­tive month of job gains above 200,000, the long­est such stretch since 1994, and re­in­force views the econ­omy's fun­da­men­tals are strong enough to weather the tur­bu­lence in Europe, Ja­pan and China, as well as in some emerg­ing mar­kets. "The U.S. is sort of an is­land of rel­a­tive strength in a pretty choppy global sea. Peo­ple are wor­ried the prob­lems abroad could af­flict the U.S., but our do­mes­tic fun­da­men­tals are pretty sound and should out­weigh that," said Josh Fein­man, chief global economist at Deutsche As­set & Wealth Man­age­ment in New York. The sur- vey of em­ploy­ers is ex­pected to show job gains in 2014 were the largest since 1999.

The un­em­ploy­ment rate is fore­cast slip­ping one-tenth of a per­cent­age point to 5.7 per­cent in De­cem­ber, which would be the low­est since June 2008. There is, how­ever, un­cer­tainty with the De­cem­ber job­less rate fore­cast as the house­hold survey data from which the rate is de­rived will be re­vised back five years.

Still, econ­o­mists do not ex­pect a ma­te­rial shift in the trend. The un­em­ploy­ment rate dropped 0.8 per­cent­age point in the first 11 months of 2014. The La­bor Depart­ment will publish De­cem­ber's em­ploy­ment re­port on Fri­day at 08:30 a.m. The re­port will also be watched for signs that wage growth is shift­ing higher after a nine-cent jump in Novem­ber. Wage growth has been frus­trat­ingly tepid and econ­o­mists be­lieve the Fed­eral Re­serve will be hes­i­tant to pull the trig­ger on rais­ing in­ter­est rates with­out a sig­nif­i­cant in­crease in la­bor costs.

The U.S. cen­tral bank has kept its short­term in­ter­est rate near zero since De­cem­ber 2008. It has not raised in­ter­est rates since 2006, but re­cently sig­naled it was mov­ing closer to hik­ing, even if in­fla­tion re­mains be­low the Fed's 2.0 per­cent tar­get. Most econ­o­mists ex­pect the first rate in­crease in June. "As the la­bor mar­ket moves closer to full em­ploy­ment ... we are likely to see firms in­crease wages. We have al­ready started to see some of that," said Sam Bullard, a se­nior economist at Wells Fargo in Char­lotte, North Carolina.

Most of the mea­sures tracked by Fed Chair Janet Yellen to gauge the amount of slack in the la­bor mar­ket have pointed to tight­en­ing con­di­tions and would be again un­der scru­tiny.

A broad mea­sure of job­less­ness that in­cludes peo­ple who want to work but have given up search­ing and those work­ing part­time be­cause they can­not find full-time em­ploy­ment is at six-year lows, the la­bor force ap­pears to have sta­bi­lized, while the ranks of the long-term un­em­ployed are also shrink­ing. Job gains in De­cem­ber were prob­a­bly dis­persed across all sec­tors. Pri­vate pay-

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