Job outlook rises as reports suggest more hiring

WASHINGTON (AP) ? June may turn out to have been a good month to find a job after all.

A private report said businesses hired twice as many workers as economists had expected. Applications for unemployment benefits have reached a seven-week low. And more small businesses say they plan to increase hiring in the next three months, a trade association said.

The brighter outlook for jobs emerged one day before the government will issue the June employment report, regarded as the most reliable gauge of job creation.

The three reports suggested that the overall economy may also be starting to strengthen now that gas prices have begun to decline and supply disruptions stemming from Japan’s crises have started to ease.

Economists responded to the latest data by raising their forecasts for hiring in June. Many now estimate that employers added at least 120,000 jobs. Some are predicting as many as 200,000 net new jobs for June.

That’s well above the consensus forecast for 90,000, based on a survey of economists by FactSet. And it could signal that weak hiring in May was a setback caused by temporary factors.

“The end of job growth may have been reported prematurely,” said Joel Naroff, chief economist at Naroff Economic Advisors.

The outlook brightened Thursday morning after payroll processor ADP said the private sector added 157,000 jobs last month. That was more than double the number economists had forecast. And it was much higher than the 36,000 jobs that ADP said employers had added in May.

Stocks rose after the report was released. The Dow Jones industrial average gained more than 118 points in afternoon trading.

Many economists said the ADP report was the reason they revised up their forecasts for the government’s jobs report to be issued Friday.

Nigel Gault, chief U.S. economist at IHS Global Insight, raised his projection for net job gains in June from 100,000 to 140,000. Ian Shepherdson, chief U.S. economist at High Frequency Economics, boosted his forecast from 100,000 to 175,000.

“We always took the view that May was hit by one-time factors like severe weather and supply-chain disruptions, but this report suggests those factors were more significant than we thought,” Shepherdson said.

In May, employers added only 54,000 jobs, far fewer than the average gain of 220,000 in the previous three months. The unemployment rate rose to 9.1 percent from 9 percent in April.

Among the evidence Thursday that the economy might be starting to pick up after a sluggish first half of the year:

? Retailers posted strong sales in June, boosted by widespread discounts. Target Corp., Costco Wholesale Corp. and Limited Brands Inc. all exceeded Wall Street estimates. The International Council of Shopping Centers said retailers collectively enjoyed their best June in 12 years, based on a tally of 28 store chains. The figures are based on revenue at stores open at least a year.

? The number of people who applied for unemployment benefits fell to a seasonally adjusted 418,000 last week, the Labor Department said. That’s the lowest level in nearly two months. Still, applications have topped 400,000 for 13 weeks, evidence that the job market has weakened since the year began.

? Small businesses say they’re more likely to boost hiring in the next three months, according to a survey by the National Federation of Independent Business. In May, more companies said they planned to cut jobs.

And 15 percent of small companies say they have unfilled job openings, the NFIB said, up from 12 percent the previous month.

Gas prices have fallen sharply since peaking in early May at a national average of nearly $4 per gallon. Prices averaged $3.58 a gallon nationwide on Thursday, according to AAA.

And manufacturing activity expanded in June at a faster pace than the previous month, according to the Institute for Supply Management. That suggests the parts shortage caused by the March 11 earthquake in Japan is beginning to abate.

Those factors “are pretty much behind us, so unless we have something else unexpected, I think we’ll be in good shape” in the second half of this year, said Kurt Karl, chief U.S. economist at Swiss Re.

The government said last month that the economy grew only 1.9 percent in the January-March quarter. Analysts are expecting similarly weak growth in April-June quarter.

The economy will grow at a 3.2 percent pace in final six months of the year, according to an Associated Press survey of 38 economists.

Still, growth must be stronger to significantly lower the unemployment rate. The economy would need to grow 5 percent for a whole year to significantly bring down the unemployment rate. Economic growth of just 3 percent a year would hold the unemployment steady and keep up with population growth.


AP Retail Writer Anne D’Innocenzio contributed to this report.