10:06 PM
By Lucia Mutikani
WASHINGTON | Fri Dec 3, 2010 12:15am EST
WASHINGTON (Reuters) - The U.S. economy probably recorded a second month of solid job gains in November, which would bolster views the labor market is improving even though the activity is not enough yet to lower the unemployment rate.
Nonfarm payrolls likely rose 140,000, with private hiring increasing by more than 100,000 for a fifth straight month in November, according to a Reuters survey. The unemployment rate is forecast to have held steady at 9.6 percent.
Economists said there was a chance payrolls could surprise on the upside, citing a resurgence in retail hiring after a two-year slump. In October, U.S. employment increased by 153,000.
The Labor Department will release its closely watched monthly report on jobs at 8:30 a.m. ET.
"There is a lot of optimism that the economy is on the rebound and definitely has turned around," said Barbara Byrne Denham, chief economist of Eastern Consolidated in New York.
A second month of strong employment gains coming on the heels of reports indicating a pick-up in demand could shore up perceptions the economy's recovery from the worst recession since the 1930s is becoming self-sustaining.
That shift began to shape up in the third quarter as consumer spending's contribution to growth eclipsed the rebuilding of inventories. Consumer spending typically accounts for about two-thirds of U.S. economic activity.
But unemployment is seen remaining stuck at 9.6 percent for a fourth straight month in November because, with conditions in the jobs market improving, some discouraged workers probably rejoined the labor force.
Employment has increased by about 874,000 since December 2009, a tiny fraction of the over 8 million jobs lost during the recession.
Analysts believe that gap would compel the Federal Reserve to fully implement its controversial $600 billion program to buy government bonds. The purchases are designed to push already low interest rates down further to stimulate demand.
Concerns about joblessness and low inflation led to the U.S. central bank's decision last month to launch its now much-criticized second round of quantitative easing, as QE2 is known in financial markets.
QE2 HERE TO STAY
"We need to create 150,000 to 250,000 jobs consistently over a number of years before the unemployment rate can come down," said John Canally, an economist at LPL Financial in Boston.
"So even if we get a blow-out number of 300,000 in November and it increases calls for the Fed to stop QE2, they will want to see that over a number of months."
Fed officials are not the only ones worried about unemployment. The health of the labor market could determine whether President Barack Obama gets a second term in office in 2012.
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