Updated from 12:29 p.m. EST
Economists are predicting that Friday's jobs report will show a second-straight month of improving employment statistics in October, raising hopes that a labor market recovery is for real.
The experts believe that the government's monthly data will confirm better macroeconomic trends -- notably a five-week drop in weekly initial jobless claims -- despite a survey by Chicago-outplacement firm Challenger, Gray & Christmas earlier this week that showed a jump in planned layoffs last month.
A consensus of economists is forecasting the economy to have added 55,000 jobs in October after a 57,000 gain in the previous month. If so, it will be the first time payrolls increased in consecutive months in a year. The unemployment rate, meanwhile, is expected to remain at 6.1%. "The weight of evidence favors payroll growth," said John Lonski, senior economist at Moody's.
On Thursday, the government said the number of workers filing for first-time unemployment benefits last week fell to 348,000 -- the lowest level since January 2001. Although those figures came after the monthly survey has been completed, they are consistent with a prolonged decline in claims. The four-week average of filings, which adjusts for volatility, is at its lowest since March 2001.
(For more information on Thursday's economic data,
Moreover, closely watched employment indices within the Institute for Supply Management's manufacturing and service-sector surveys strengthened in October, as orders picked up.
"Those reports favor something strong, in terms of employment growth, soon," Lonski said.
Still, Lonski conceded that productivity -- which has curbed job growth over the past year, as employers managed to get more out of less workers -- ould continue to limit new hiring. Earlier Thursday, the government said productivity soared at an 8.1% annualized rate in the third quarter, with manufacturing productivity up 8.6% during that period.
The economy has lost about 2.7 million jobs since 2001.
Meanwhile, the Challenger, Gray survey earlier this week provided some ammunition for skeptics. It said the number of announced job cuts surged 125% over September to 171,874 payrolls last month, the most since October 2002.
"The survey indicates that the priority of productivity growth is not going away," said Peter Kretzmer, an economist at Banc of America Securities, who nevertheless noted that there is a lot of variability in the series.
In a speech, Federal Reserve governor Ben Bernanke said Thursday that job growth should begin to pick up in the next two quarters. "Real GDP has accelerated considerably since the spring, and most forecasters project that it will continue to grow strongly in 2004," he said.
Bernanke said he was "relatively optimistic" about a recovery, adding that "employers will soon begin to exhaust opportunities to squeeze out still further gains in productivity."
Elsewhere, economists are convinced that a rise in workers' hours for the first time in over three years during the third quarter suggests that companies may be getting ready to start hiring.
"For the economic expansion to become self-sustaining, employers must respond to the government stimulus packages and faster demand growth by not just becoming more productive but by actually going out and hiring full-time employees," said David Rosenberg, an economist at Merrill Lynch, in a note.
Among recruiters, temporary staffing firm
has been optimistic. "This quarter more than any other in 2003, we sensed stronger signals for a meaningful recovery," the company said in its third-quarter earnings release.
There is anecdotal verification of hiring, too. Trucking company
( YELL) is reported to be expanding its workforce, as is retailer
, ahead of the holiday season.
"In order to provide customers with the best possible service during the busy holiday shopping season, Best Buy will temporarily increase the number of employees in its U.S. retail stores by an average of 32% per store," the company said in a recent press release.