WRAPUP 1-Census jobs seen depressing US employment in June

* Nonfarm payrolls seen falling 111,000 on census jobs

* Private hiring likely picked up after weak May

* Unemployment rate seen nudging up to 9.8 pct

* Average workweek seen steady at 34.2 hours

By Lucia Mutikani

WASHINGTON, July 2 (BestGrowthStock) – U.S. employment likely
contracted for the first time this year in June as thousands of
temporary jobs for census workers ended, though private-sector
hiring probably picked up, according to a Reuters survey.

The government’s closely followed employment report due at
8:30 a.m. (1230 GMT) on Friday could shed more light on the
strength of the economy after a raft of data pointed to a loss
of momentum, fanning fears of a double-dip recession.

Nonfarm payrolls are forecast to have dropped by 110,000
last month after increasing 431,000 in May on a surge in census
hiring. Those temporary workers — 411,000 hired in May alone
— are now being let go.

But private hiring, considered a better measure of labor
market health, likely rose by 112,000 after May’s 41,000
increase, the poll found. However, a report on Wednesday
showing private employers added only 13,000 jobs last month is
seen posing a downside risk to that forecast.

“The labor market is definitely losing steam. I expect
private payrolls to rise only fifty thousand,” said Sung Won
Sohn, an economics professor at California State University in
the Channel Islands.

“At this stage of the recovery this is nothing. We need a
couple hundred thousand a month to grow the economy,” he said.
“The best thing we can say is the labor market has hit the
bottom, it’s not getting any worse, but there really isn’t any
meaningful recovery.”

Public unhappiness with the economy is eroding President
Barack Obama’s popularity. Obama, who has called job creation
his No. 1 priority, has tried to put the blame on policies of
the previous administration.

With voters in an anti-Washington, anti-incumbent mood,
failure to put back to work the more than 8 million Americans
who lost jobs during the recession could cost the Democratic
Party dearly in the November mid-term elections.

BUSINESSES HOLDING BACK

The economy has expanded for three straight quarters
following the longest and deepest recession since the 1930s,
but growth has not been vigorous enough to convince businesses
to step up hiring.

With unemployment stubbornly high, household spending has
turned sluggish in recent months, threatening to create a
vicious cycle that stock market investors and some analysts
worry could tip the economy back into recession.

“We are in a difficult situation. I don’t think there is
political will to have another stimulus program and even if we
did I am not sure people feel it would be that effective,” said
Stephen Bronars, a senior economist at Welch Consulting in
Washington.

The Federal Reserve is also in a bind. It has held
benchmark overnight interest rates close to zero since December
2008 and has pumped more than $1 trillion into the economy. Fed
officials believe a sustainable recovery has taken hold, but
are watching cautiously.

According to Census Bureau data, there were 344,157
temporary census workers during the survey week for the
employment report. That compares to 573,779 in May.

The loss of the temporary census jobs, combined with the
anticipated return of some previously discouraged workers back
into the labor force, is seen lifting the jobless rate to 9.8
percent from 9.7 percent in May.

Analysts said uncertainty in Europe, where huge budget
deficits are forcing governments to slash public spending, was
contributing to the reluctance by some U.S. businesses to hire.
Layoffs at cash-strapped U.S. state and local governments is
also seen weighing on employment.

Slower export growth to Europe as economies there slow is
expected to have only a limited impact on the U.S. economy, but
analysts said falling share prices could crimp spending.

With businesses wary of hiring, economists look for a
further rise in the length of the average workweek before
employment perks up. However, for June they see the work week
holding steady at 34.2 hours.
(Reporting by Lucia Mutikani, Editing by Chizu Nomiyama)

WRAPUP 1-Census jobs seen depressing US employment in June