June Report Expected to Show Job Growth

A U.S. economy that’s recovering from recession is starting to create the jobs necessary to keep it going, a report this week is expected to show.

Economists predict that the Labor Department’s report Friday on employment trends will show that businesses added 75,000 workers to their payrolls in June.

The unemployment rate probably rose to 5.9% from 5.8% a month earlier. That would reflect that job seekers are entering the labor force faster than positions are being created.

Hiring at some companies such as Microsoft Corp. is starting to pick up in tandem with sales, analysts say.

Still, widespread employment gains are months away, they said.

“Caution is the order of the day” until business confidence, profits and demand begin to rise in earnest, said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd. in New York.

After growing at a 6.1% annual rate in the first three months, the economy slowed to a 2.7% pace in the second quarter, according to a Bloomberg News survey of 55 economists. Growth may pick up to a 3.2% rate in the third quarter and 3.5% in the fourth.

To ensure the rebound stays intact, Federal Reserve policymakers kept their benchmark short-term interest rate at a four-decade low of 1.75% last week. The strength of demand “remains uncertain” in coming months, the central bankers said in a statement.

Other economic reports expected this week:

* Today, the Commerce Department will report on May construction spending. Analysts expect a 0.2% increase, matching April’s rise.

The Institute for Supply Management will report on manufacturing activity in June. It’s expected to say that manufacturing expanded for a fifth straight month.

Factories have picked up the pace after businesses reduced inventories by a record $119.3 billion in the final three months of 2001 and an additional $27.7 billion in the first quarter.

* Wednesday, the Commerce Department will report on May factory orders. A 0.6% increase is expected by economists. That would match April’s rise.

The Institute for Supply Management will report on service-sector activity in June.

The report is expected to show that the service sector expanded last month, but at a slower pace than May.