* Nonfarm payrolls forecast rising 175,000 in January
* Unemployment rate unchanged at 4.7 percent
* Average hourly earnings expected to increase 0.3 percent
By Lucia Mutikani
WASHINGTON, Feb 3 U.S. job growth likely
accelerated in January, with wages expected to have increased
steadily, suggesting a strong start for the Trump administration
as it seeks to boost the economy and employment.
Nonfarm payrolls probably increased by 175,000 jobs last
month, in part as warm weather bolstered hiring in the
construction sector, according to a Reuters survey of
economists. That would be a pick-up from the 156,000 jobs
created in December.
President Donald Trump vowed during last year's election
campaign to deliver 4 percent annual gross domestic product
growth, largely on the back of a plan to cut taxes, reduce
regulations, increase infrastructure spending and renegotiate
deals in the United States' favor.
Although details on the policy proposals remain sketchy,
consumer and business confidence have surged in the wake of
Trump's election victory last November.
But with the economy near full employment, some economists
are skeptical of the 4 percent growth pledge. Annual GDP growth
has not exceeded 2.6 percent since the 2007-08 recession.
"Time will tell if Trump can keep the economy's winning
streak alive. It's not going to be easy to bring back those
manufacturing jobs lost since the late '90s," said Chris Rupkey,
chief economist at MUFG Union Bank in New York.
The Labor Department will publish its closely watched
employment report on Friday at 08:30 a.m. (1330 GMT).
With the minimum wage taking effect in more than a dozen
states in January, average hourly earnings are forecast to have
risen by 0.3 percent after increasing 0.4 percent in December.
However, the year-on-year gain in earnings is expected to fall
to 2.8 percent from 2.9 percent in December as the jump in wages
seen in January 2016 drops out of the picture.
Rising wages could pave the way for the Federal Reserve to
raise interest rates this year. The unemployment rate is
forecast unchanged at 4.7 percent.
"Solid job growth should help, in part, lead to lower
unemployment and firming wage pressures, and justify the Fed
hiking interest rates twice this year," said Sam Bullard, a
senior economist at Wells Fargo Securities in Charlotte, North
The Fed, which hiked rates in December, has forecast three
rate increases this year. On Wednesday, the U.S. central bank
kept its benchmark overnight interest rate unchanged in a range
of 0.50 percent to 0.75 percent. It said it expected labor
market conditions would strengthen "somewhat further."
UPSIDE SURPRISE LIKELY
January payrolls could beat expectations. The ADP National
Employment Report on Wednesday showed that private employers
added 246,000 jobs last month, up from 151,000 in December. At
the same time, the Institute for Supply Management's measure of
factory employment hit its highest level since August 2014.
With its January employment report, the government will
publish its annual "benchmark" revisions and update the formulas
it uses to smooth the data for regular seasonal fluctuations. It
will also incorporate new population estimates.
In an early benchmark estimate last year, the government
said the level of employment in March of last year was likely
150,000 lower than it had reported.
As the labor market nears full employment, the pool of
workers is shrinking, which is slowing job growth. Job gains
averaged 180,000 per month in 2016, down from 229,000 in 2015.
The shift in population controls will mean figures on the
labor force or number of employed or unemployed in January will
not be directly comparable with December.
The labor force participation rate, or the share of
working-age Americans who are employed or at least looking for a
job, has been bouncing around near multi-decade lows, pointing
to slack in the jobs market. Some of the decline reflects
"I think we will hit full employment later this year," said
Ryan Sweet, a senior economist at Moody's Analytics in West
Chester, Pennsylvania. "There is still shadow slack in the jobs
market. But if we continue to create more than 100,000 jobs per
month, we are going to work through that slack."
All sectors of the economy are expected to have added jobs
in January. Manufacturing payrolls are forecast to have
increased for a second straight month as the oil-related drag on
the sector eases. Construction employment likely rebounded after
being depressed by cold weather in December.
Retail payrolls probably declined as workers hired during
the holiday season were laid off. A sharp drop is likely after
retailers, including Macy's, Sears, American
Apparel and Abercrombie & Fitch announced job cuts amid
Department store sales are being undercut by online
retailers, led by Amazon.com.
Government employment likely increased in January for a
third straight month. Economists see no impact from a freeze on
the hiring of civilian federal government workers, which took
effect on Jan. 22 - well after the survey period for nonfarm
payrolls. It will hurt job growth in the coming months.
"The actual impact, while still ambiguous, will likely be
more modest, and we estimate that it will reduce job gains by
about 20,000 per month," said Daniel Silver, an economist at
JPMorgan in New York.
(Reporting by Lucia Mutikani; Editing by Dan Grebler)