200,000 New Jobs Estimated for December

Economists expect the government to report this week that U.S. payrolls grew by 200,000 jobs last month as companies remained optimistic that the new year would bring more corporate investment and solid economic growth.

The estimate of 200,000 net new nonfarm jobs in December is the median forecast in a Bloomberg News survey of economists. In November, nonfarm payrolls expanded by 215,000 jobs. The report Friday from the Labor Department probably will also show that the unemployment rate held at 5%, in line with the average of the last decade, those surveyed said.

Business investment in new equipment and operations will probably play a larger role in driving growth this year and compensate for any weakening in consumer spending, economists said. The survey indicates that a gauge of manufacturing to be released Tuesday probably will still show strength in production and orders.

“Corporations in America have made huge profits, but I think they’ve been hesitant to spend those profits” so far, said Timothy Kane, a research fellow at the Heritage Foundation in Washington. “Most of us think that the time has come that we will probably see a lot of expansion this year, a lot of hiring.”

Also Tuesday, investors may get a sense of how much more the Federal Reserve will raise its benchmark interest rate, after 13 increases in a row, when the central bank releases minutes of its Dec. 13 policy meeting.

With higher interest rates and a slowdown in the housing market making it less probable that consumer spending will accelerate this year, the strength of the economy may depend more on how much companies upgrade plants and equipment.

For now, consumer spending has remained steady. The week ended Dec. 24 was the strongest of a moderate holiday shopping season, with comparable sales rising 2.8% from the previous week and 3.9% year over year, the International Council of Shopping Centers reported.

The group reaffirmed its forecast for a gain of 3% to 3.5% for the season and will release final December figures Thursday.