US employment level gains momentum;wages rise

May 28 | Updated: May 29 2007, 05:30am hrs
Hiring in the US rebounded in May from a two-year low and wage gains accelerated, providing a lift to an economy buffeted by a struggling housing market and record gasoline prices, reports this week may show. The projected 1,35,000 increase in payrolls would follow a 88,000 gain in April, according to the median estimate in a Bloomberg News survey of economists.

The jobless rate is forecast to remain at 4.5%, according to the survey. Rising wages are helping Americans cope with fuel costs and decreased home values, helping stabilise growth and increasing the odds that the economy will recover in the second half as the Federal Reserve forecasts. Thats after the economy expanded in the first quarter at the slowest since late 2002.

The commerce department will issue a new estimate of first-quarter gross domestic product this week. Were getting decent job growth, consistent with moderate growth in the economy, said Joshua Shapiro, chief US economist at Maria Fiorini Ramirez Inc in New York.

Consumer spending probably wont stay up at the pace weve seen, but it will be enough to keep the economy moving ahead.

Growth is adequate for the Fed. The labor departments payroll figures are scheduled for release on June 1. The report may show hourly wages rose 0.3% after a 0.2% rise, according to the Bloomberg survey. Weekly hours worked by production workers probably held at 33.8.

Figures from the Commerce Department the same day will lend support to the view of many economists that wages are supporting consumer demand.

The Commerce report will show personal spending rose 0.4% in April as incomes increased 0.3%, according to the median estimates.

The personal spending report will also include a read on the Feds preferred inflation gauge for April.