Sept. 3 (Bloomberg) -- Companies in the U.S. added more jobs than forecast in August, easing concern the economy was falling back into recession.
Private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a gain of 40,000. Overall employment fell 54,000 for a second month and the unemployment rate rose to 9.6 percent as more people entered the labor force.
The report bolters Federal Reserve Chairman Ben S. Bernanke’s view that the conditions are in place for a pickup in U.S. growth in 2011. Companies such as Caterpillar Inc. are boosting staff as the global economy grows, a sign some businesses see the recent slowdown in growth as temporary and are looking toward an improving economy.
“An increase in private payrolls is a move in the direction,” Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, said before the report. “It will ease concern about a double dip. It’s a stunted recovery and we still have a lot of headwinds.”
Private payrolls were forecast to rise by 40,000, according to the median estimate of 55 economists surveyed by Bloomberg. Projections ranged from a drop of 12,000 to a 120,000 increase. The government revised the July headcount from a prior estimate of a 71,000 gain.
Overall payrolls were forecast to drop by 105,000, the survey median showed. The decrease reflected a 114,000 decline of temporary workers hired by the government to conduct the decennial population count.
Census Workers
The unwinding of census employment distorts the payroll figures for months as the government dismisses workers as the count winds down. For that reason, economists say private payrolls, which exclude government jobs, are a better gauge of the state of the labor market.
Economists surveyed projected the jobless rate would rise to 9.6 percent from 9.5 percent in July.
The average work week for all workers held at 34.2 hours.
The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- increased to 16.7 percent from 16.5 percent.
The report also showed long-term unemployment dropped. The number of people unemployed for 27 weeks or more fell as a percentage of all jobless to 42 percent from 44.9 percent.
Temporary Help
The number of temporary workers increased 16,800. Payrolls at temporary-help agencies often slows as companies seeing a steady increase in demand take on permanent staff.
The U.S. economy grew at a 1.6 percent annual pace in the second quarter after expanding at a 3.7 percent rate in the first three months of the year and 5 percent at the end of 2009.
Some manufacturers are shedding workers. Northrop Grumman’s shipbuilding unit last month announced 292 job cuts, with plans to slash another 350 by the end of the year, and United Technologies Corp.’s Pratt & Whitney jet engine unit will trim 129 hourly employees in Connecticut.
“We are seeing the worst economy in my 35-plus years” of industry experience, William Johnson, chief executive officer of H.J. Heinz Co., said on a conference call with analysts this week. “Consumer confidence has not returned.”
Heinz, the world’s biggest ketchup maker, is looking to boost sales overseas as U.S. are dining more at home, limiting restaurant traffic.
Obama Policies
Voters are increasingly skeptical of the Obama administration’s economic policies heading into November elections that will determine which political party leads congress.
“Our most urgent task is to restore our economy and put the millions of Americans who have lost their jobs back to work,” Obama said in a speech this week declaring the end of the U.S. combat mission in Iraq. “This will be difficult. But in the days to come, it must be our central mission as a people.”
The White House has been considering payroll tax relief to encourage new hiring, more tax breaks for small businesses and new infrastructure spending, according to two congressional aides familiar with the discussions who spoke on condition of anonymity because the talks are preliminary. Obama is scheduled to speak about the employment report at 10 a.m. Washington time.
The 650,000 increase in payrolls in the seven months through July shows it’ll take years to recoup the 8.4 million jobs lost during the recession that began in December 2007, the biggest employment slump in the post-World War II era.
Unemployment Forecast
Unemployment, which reached a 26-year high of 10.1 percent in October 2009, will average more than 9 percent through 2011, according to a Bloomberg survey.
“The painfully slow recovery in the labor market has restrained growth in labor income, raised uncertainty about job security and prospects, and damped confidence,” Bernanke said in a speech in Jackson Hole, Wyoming, on Aug. 27.
State and local government cutbacks in the face of mounting budget deficits are aggravating the problem. The number of workers employed by state and local agencies fell in July to the lowest levels since 2007. Miami, the seat of Florida’s most- populous county, on Aug. 31 imposed $76.9 million of salary, health-insurance and pension cuts on city employees to address a budget gap.
Peoria, Illinois-based Caterpillar, the world’s largest construction equipment maker, said last month it may add as many as 9,000 workers worldwide this year as sales climb in developing markets.
