WRAPUP 1-US payrolls likely grew in Oct,jobless rate steady

* Nonfarm payrolls seen rising 60,000 in October

* Private employment seen increasing 75,000

* Unemployment rate seen steady at 9.6 percent

* Average workweek seen unchanged at 34.2 hours

By Lucia Mutikani

WASHINGTON, Nov 5 (BestGrowthStock) – U.S. employers added jobs
last month for the first time since May, the government is
expected to report on Friday, but at such a slow pace that it
is unlikely to make a dent in the lofty unemployment rate.

However, the closely watched monthly report, which the
Labor Department will release at 8:30 a.m. (1230 GMT), could
offer more signs of a tick up in sluggish economic activity.

Nonfarm payrolls rebounded 60,000 in October, a Reuters
survey predicted, reflecting a modest rise in private hiring
and a small drag on government employment from the departure of
the few remaining temporary census workers.

Payrolls declined 95,000 in September and budget-pressured
state and local governments, which shed 83,000 employees during
that month, are a wild card in October’s prediction.

“It’s not a level of growth that pleases much anyone,
particularly the millions that lost their jobs during the
recession,” said Brian Levitt, an economist at Oppenheimer
Funds in New York.

Private employment, which has averaged monthly gains of
roughly 80,000 this year, is expected to have risen by 75,000
after a gain of 64,000 in September, but the jobless rate is
seen holding at 9.6 percent for a third straight month.

Concern over the anemic job market was a factor behind the
Federal Reserve’s decision this week to pump an additional $600
billion into the economy through government bond purchases to
push interest rates down further and stimulate demand.

The U.S. central bank, which cut overnight interest rates
to near zero in December 2008, had already bought about $1.7
trillion in government debt and mortgage-linked bonds.

Analysts say the economy needs to create at least 125,000
jobs a month to start bringing the unemployment rate down, but
economic growth remains rather sluggish nearly 1-1/2 years into
the recovery from the worst recession since the 1930s.

Anger over unemployment helped the Republican Party to
wrest control of the House of Representatives from the
Democrats in Tuesday’s election, which was viewed as a vote on
President Barack Obama’s economic policies.

ACTIVITY FIRMING

But there are early signs growth is firming somewhat, with
activity in both the manufacturing and service sectors rising
in October. Economists said this bodes well for employment.

“We are seeing signs that momentum is picking up again,”
said Jim O’Sullivan, chief economist at MF Global in New York.
“So we do think that momentum is going to be up again in the
employment numbers over the next three or four months.”

Employment in October was seen supported by the
manufacturing sector, where firms are expected to have added
jobs after laying off 6,000 workers in September. Construction,
however, probably fell for a second straight month, consistent
with the weakness in home building.

Overall, the goods-producing sector should see modest gains
in payrolls after they fell by 22,000 jobs in September.

Private service-providing employment was seen hovering
around 80,000 in October and economists will keep an eye on
temporary hiring after it showed small gains in September.

Temporary help services is usually seen as a harbinger of
permanent hiring, but some economists say strong gains may be a
sign that more people are involuntarily working part-time.

“Our normal expectation is that temporary hiring will cool
a little bit relative to other employment gains as the recovery
matures,” said Zach Pandl, a U.S. economist at Nomura
Securities International in New York.

“If you continue to see more strong gains there, it could
be evidence of more structural temporary hiring.”

A total of 9.5 million people were working part-time for
economic reasons in September. The length of the work week in
October will also be watched for signals on whether part-time
work was becoming a permanent feature of the labor market.

The average work week has barely moved this year and is
seen at 34.2 hours for a fourth straight month in October.

“If it holds at this level it suggest a more structural
change in the labor market, a shift towards involuntary
part-time work due to sluggish demand,” said Pandl.

State and local government payrolls, which contributed to
sinking government employment in September, could see a small
bounce in October because the drop in the prior month partly
reflected unusually weak hiring for teachers at the start of
the school year.

However, MF Global’s O’Sullivan warned that the weak fiscal
positions of state and local governments could mean their
payrolls drop again, just not as sharply.

“Obviously the trend in state and local government is
negative, but not negative to the point of minus eighty-three
thousand a month, which is what happened last month,” he said.

WRAPUP 1-US payrolls likely grew in Oct,jobless rate steady