–Year-To-Date Montly Average to Be Unchanged if Expectations Met

By Kasra Kangarloo

WASHINGTON (MNI) – U.S. nonfarm payrolls are predicted to fall by
70,000 in July, despite an expected gain of 100,000 in the private
sector, according to a survey of economists by Market News
International. The report will be released Friday at 8:30 ET by the
Department of Labor.

The private payrolls figure has averaged an increase of 99,000 per
month in 2010, though this includes a range of gains between 16,000 in
January and 240,000 in April. The average will be unchanged if
expectations are met.

The expected decline in the headline figure can be attributed again
to falling government payrolls, and reflects continued layoffs of
temporary Census workers. A total of 225,000 temporary Census employees
were laid off in June.

According to Mike Englund, chief economist at Action Economics, the
expected gain for private payrolls is due to positive ISM surveys in
July, as ISM manufacturing and non-manufacturing data showed continued
expansion in both sectors. The employment indexes in both surveys also
showed gains.

Recent initial claims data, according to Englund, does offset the
suggested gains from ISM surveys, as the 4-week average for the month of
July was roughly unchanged from previous months at 453,000.

A national employment report released Wednesday by ADP suggested a
gain of 42,000 payrolls in the private sector. The figure included a
63,000 increase in service industry payrolls and a 21,000 decrease in
the goods-producing sector.

Joe Lavorgna, chief economist at Deutsche Bank Securities,
estimated the headline figure would rise by 10,000 due to a surge of
150,000 additional private payrolls. According to Lavorgne, current
productivity levels will become unsustainable as the economy expands,
requiring an overdue expansion of the work force.

“Productivity by default has to slow,” Lavorgna said in a telephone
interview, because it was already at an unsustainable level.
Productivity grew by 2.1% in Q1 of 2010, after rising by more than 6%
for three straight quarters.

–Kasra Kangarloo is a reporter for Need to Know News in Washington

** Market News International Washington Bureau: 202-371-2121 **

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