Economists expect the government’s monthly report on the health of the labor market to show steady job growth in July, following signs this week that the recovery is slowly strengthening.
The Labor Department data is slated to be released Friday morning at 8:30 a.m. Analysts forecast that the economy added about 185,000 jobs — close to the amount economists say is needed for a sustainable recovery. Still, it would be a slight decline from the nearly 200,000 jobs added each of the past three months.
Some recent indicators, however, suggest that those predictions might be too cautious. The number of people filing for unemployment benefits for the first time fell last week to 326,000 — the lowest point in five years. A closely watched private estimate of job creation by human resources provider ADP predicts that employers added 200,000 positions in July.
Meanwhile, the manufacturing industry expanded for the second consecutive month, according to an index by the Institute of Supply Management. That sector was a driving force of the early years of the recovery, but has since retrenched.
Still, strong job growth in July is still not expected to make much of a dent in the unemployment rate. That’s because as the labor market has improved, many workers who had given up on the chance of finding work are deciding to actively search once more.
“An expanding labor force, as an improving job market leads previously discouraged workers to search for jobs, is preventing the unemployment rate from falling more quickly,” said Stu Hoffman, chief economist at PNC Financial Services Group.
Nor has the creation of new jobs translated into faster economic expansion. Government data this week showed the nation’s gross domestic product grew at a 1.7 percent annual rate during the second quarter — more than expected, but still well below pre-recession levels.
Jim O’Sullivan, chief U.S. economist at High Frequency Economics, said the disconnect between GDP and jobs must eventually be resolved. The optimistic scenario is that growth picks up; the other option is the job market slows down.
“As long as GDP is weaker than employment, it raises the possibility that employment could start falling back,” O’Sullivan said.
George Mason University Mercatus Center senior fellow Keith Hall said he is wagering on the latter. The former commissioner for the Bureau of Labor Statistics said the current GDP growth rate would typically translate into just 100,000 jobs a month.
This morning’s jobs report will also help shape the Federal Reserve’s plans to begin scaling back its massive stimulus program. The central bank has said it will likely reduce it $85 billion in monthly bond purchases later this year if the recovery continues apace. It hopes to end the program altogether when the unemployment rate hits 7 percent, which is expected to occur in mid-2014.
The Labor Department data is slated to be released Friday morning at 8:30 a.m. Analysts forecast that the economy added about 185,000 jobs — close to the amount economists say is needed for a sustainable recovery. Still, it would be a slight decline from the nearly 200,000 jobs added each of the past three months.
Some recent indicators, however, suggest that those predictions might be too cautious. The number of people filing for unemployment benefits for the first time fell last week to 326,000 — the lowest point in five years. A closely watched private estimate of job creation by human resources provider ADP predicts that employers added 200,000 positions in July.
Meanwhile, the manufacturing industry expanded for the second consecutive month, according to an index by the Institute of Supply Management. That sector was a driving force of the early years of the recovery, but has since retrenched.
Still, strong job growth in July is still not expected to make much of a dent in the unemployment rate. That’s because as the labor market has improved, many workers who had given up on the chance of finding work are deciding to actively search once more.
“An expanding labor force, as an improving job market leads previously discouraged workers to search for jobs, is preventing the unemployment rate from falling more quickly,” said Stu Hoffman, chief economist at PNC Financial Services Group.
Nor has the creation of new jobs translated into faster economic expansion. Government data this week showed the nation’s gross domestic product grew at a 1.7 percent annual rate during the second quarter — more than expected, but still well below pre-recession levels.
Jim O’Sullivan, chief U.S. economist at High Frequency Economics, said the disconnect between GDP and jobs must eventually be resolved. The optimistic scenario is that growth picks up; the other option is the job market slows down.
“As long as GDP is weaker than employment, it raises the possibility that employment could start falling back,” O’Sullivan said.
George Mason University Mercatus Center senior fellow Keith Hall said he is wagering on the latter. The former commissioner for the Bureau of Labor Statistics said the current GDP growth rate would typically translate into just 100,000 jobs a month.
This morning’s jobs report will also help shape the Federal Reserve’s plans to begin scaling back its massive stimulus program. The central bank has said it will likely reduce it $85 billion in monthly bond purchases later this year if the recovery continues apace. It hopes to end the program altogether when the unemployment rate hits 7 percent, which is expected to occur in mid-2014.