Job growth numbers may rise, cementing Fed tapering

Tue Sep 3, 2013 4:24pm EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. employers likely stepped up hiring in August, potentially paving the way for the Federal Reserve to start cutting back its gigantic bond purchases program later this month.

Non-farm payrolls are expected to have increased by 180,000 jobs last month, according to a Reuters survey of economists, up from a gain of 162,000 in July. The jobless rate is expected to hold steady at a 4-1/2-year low of 7.4 percent as more people search for work, a sign of confidence in the labor market.

The Labor Department will release its closely watched employment report on Friday at 8:30 a.m. EDT (1230 GMT), little more than a week before the Fed's September 17-18 policy-setting meeting.

Many economists believe the U.S. central bank will decide at that meeting to begin paring back the $85 billion in bonds it has been buying each month to keep interest rates low.

"At this point the game plan is to start the tapering at the September meeting," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York. "Even a weaker-than-expected report this week won't stop that game plan, given the weight of evidence suggesting that the labor market is improving."

Hinting at an improvement in job gains last month, the number of people filing new claims for state unemployment benefits trended lower in August. The four-week average of claims neared a six-year low during the payrolls survey week.

Separately, a survey from the Conference Board showed consumers' outlook for the labor market was upbeat in August, with an increase in the share of those anticipating more jobs and a decline in those expecting few employment opportunities.

"The data we have in hand so far for August suggest that things got incrementally better for employment," said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.   Continued...

A woman stands with her paperwork as she speaks with a recruiter while attending a job fair in New York, June 11, 2013. REUTERS/Lucas Jackson