U.S. payrolls seen rebounding in June in boost to economy

Fri Jul 8, 2016 2:52am EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. job growth likely rebounded in June as striking Verizon (VZ.N: Quote) employees returned to work and wages probably rose steadily, more evidence the economy has regained speed after a first-quarter lull.

The U.S. Labor Department's jobs tally due on Friday is likely to show nonfarm payrolls increased by 175,000 jobs last month after a meager 38,000 gain in May, according to a Reuters survey of economists. The unemployment rate is forecast rising to 4.8 percent from an 8-1/2-year low of 4.7 percent a month earlier as some job seekers returned to the labor market.

The signs of economic strength would be welcomed by the Federal Reserve. Nonetheless, economists say the report will likely have little impact on the near-term interest rate outlook given the U.S. central bank's desire to wait on more data to assess the economic impact of Britain's stunning vote last month to leave the European Union.

"Will a strong job number and solid GDP growth matter to the Fed? Probably not. The (Fed) members are like pinballs, bouncing from one temporary crisis to the next," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

The so-called Brexit referendum on June 23 roiled financial markets, raising fears that sustained volatility might negatively impact companies' hiring and investment decisions. Economists have also warned that slower growth in Europe and a stronger dollar could weigh on the U.S. economy.

Minutes of the Fed's June 14-15 meeting published on Wednesday showed that officials "agreed that ... it was prudent to wait for additional data on the consequences of the UK vote."

The Fed raised rates in December for the first time in nearly a decade, but markets now expect no further increase this year.

May's payroll gain - the smallest since September 2010 - in part reflected the loss of 35,100 Verizon (VZ.N: Quote) workers, who were excluded from the count while on a month-long strike. With their return, information industry employment likely snapped back.   Continued...

People wait in line to enter a job fair in New York in this April 18, 2012 file photo. REUTERS/Shannon Stapleton