×

Solid US employment growth eyed in August

U.S. job growth likely accelerated a bit in August and the unemployment rate probably fell to 6.1 percent, offering fresh evidence of sustained momentum in the economy.

Economists predict that nonfarm payrolls increased 225,000 last month, according to a Reuters survey. It would mark the seventh straight month that employment has expanded above 200,000 jobs - a stretch last witnessed in 1997.

Read MoreUS service sector perched at 9-year high

The government reported last month that the economy added 209,000 jobs in July. Economists, however, expect June and July data will be revised to show more jobs created than previously reported, in line with a recent trend of upward revisions.

A sign  hangs in the window of a clothing store on June 6, 2014 in San Francisco, California.
Justin Sullivan / Staff | Getty Images News
A sign hangs in the window of a clothing store on June 6, 2014 in San Francisco, California.

"It would be further confirmation that the economy is strengthening and is poised to break out later this year or early next," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.

The Labor Department will release its monthly employment report at 8:30 a.m. on Friday. The report regularly sets the tone for financial markets worldwide.

Should employment meet expectations, it will add to data such as automobile sales and manufacturing and services sector gauges in casting the economy in a bullish light.

Read MoreRogoff: US economy is tighter than you think

Third-quarter growth estimates range as high as a 3.5 percent annual rate, well above the economy's long-term growth potential, which economists peg as between 2.0 percent and 2.5 percent.

But solid jobs growth alone is insufficient for the Federal Reserve to initiate an early interest rate increase.

Fed Chairman Janet Yellen is concerned about sluggish wage growth, the still-elevated numbers of Americans working part-time even though they want full-time employment, and Americans still suffering from a long spell of joblessness.

While many of these metrics are improving, the U.S. central bank has pointed to these factors as evidence of a "significant underutilization" of labor market resources that merits a stimulative monetary policy.

"The Fed will be encouraged by the ongoing labor market improvement, but they are still wanting to see more marked progress in these measures to see that the labor market slack is being reduced," said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Jobless rate seen falling

The unemployment rate is forecast declining one-tenth of a percentage point in August from 6.2 percent in July. Some economists, however, see a chance it could go up as brightening employment prospects lure some discouraged job seekers back into the labor force.

Average hourly earnings are expected to have increased 0.2 percent after being flat in July.

Read MoreJobs data may reveal more about Fed's next move

The jobs data will come ahead of a Fed policy meeting on Sept. 16-17. The central bank has kept benchmark lending rates near zero since December 2008 and financial markets do not foresee an increase until around the middle of next year.

The U.S. economy's better fortunes are in stark contrast with the struggling European economy. The European Central Bank on Thursday cut interest rates to a record low in an effort to stimulate growth.

U.S. employment gains in August were likely spread broadly across the economy.

The private sector will probably account for the bulk of the increase in payrolls, advancing 206,000 after rising 198,000 in July, according to the Reuters poll.

Government employment is forecast increasing 19,000.

While a 13th straight monthly gain in manufacturing payrolls is expected, the pace of increase likely slowed sharply after July's hefty 28,000 rise, which reflected a decision by carmakers to keep assembly lines running in the summer.

Read MorePrivate job growth slows, but still tops 200,000

Construction employment likely advanced for an eighth straight month. A sixth consecutive month of job gains is expected in the retail sector.

The length of the average workweek probably held steady at 34.5 hours for a sixth month in a row, the poll showed.

By Reuters