WASHINGTON – Healthy U.S. economic growth in the second half of last year has raised expectations that 2013 ended with a fifth straight month of solid hiring.
Economists predict that employers added 196,000 jobs last month, according to a survey by FactSet. That would be nearly as strong as November’s robust gain of 203,000. The unemployment rate is forecast to remain at a five-year low of 7 per cent.
The Labor Department will release the December employment report at 8:30 a.m. Eastern time Friday.
From August through November, the economy added an average of 204,000 jobs a month. Another month of 200,000 or so new jobs would suggest that employers are hiring at a sustained pace. That’s what policymakers and job hunters have hoped for since the Great Recession ended more than 4 1/2 years ago.
“I think the economy’s finally moving into third gear here,” said Ethan Harris, global economist at Bank of America Merrill Lynch.
Steady job gains were a big reason the Federal Reserve decided last month to cut back on its monthly bond purchases, which are intended to lower long-term loan rates to stimulate spending and growth. The Fed is paring its bond buying to $75 billion a month from $85 billion. It is likely to further reduce its pace of purchases if the strong job gains continue.
Recent data have painted a picture of an economy on the steady rise. Exports hit a record level in November, lowering the U.S. trade deficit. Businesses have ordered more manufactured goods. Auto sales reached a six-year high in 2013.
Analysts now estimate that the economy expanded at a healthy annual rate of 3 per cent to 3.5 per cent in the October-December quarter. That’s up from earlier forecasts of a 2 per cent rate or less. It would follow a strong 4.1 per cent growth rate reported for the July-September quarter.
That healthier economic growth likely fueled hiring in December. Payroll processor ADP said this week that private businesses added the most jobs in 13 months in December. Construction companies reported their biggest hiring rise since 2006.
And two surveys by the Institute for Supply Management found that both manufacturing and services firms added workers at a faster pace last month than in November.
Small businesses are also ramping up hiring. The National Federation of Independent Business, a leading small business group, said its members added jobs in December at their fastest rate in nearly eight years.
If the economists’ forecasts are accurate, the U.S. economy will have gained 2.27 million jobs in 2013 — the most since 2005.
Still, there have been some hints that last month might have been weaker than expected. The number of people seeking unemployment benefits spiked in December, which suggests that layoffs rose.
Economists caution that those figures might have been distorted by the Thanksgiving and Christmas holidays, which can create unusual spikes in temporary job cuts. Applications for unemployment benefits have fallen back to pre-recession levels in the past two weeks.
Cold weather may have also caused some employees to miss work. That could lower the government’s calculation of job gains.