WASHINGTON — Employment gains have been understated since the middle of 2010, showing the expansion is in a better position to withstand headwinds such as rising gasoline prices.
The Labor Department has raised its initial estimate of payroll employment in all but two months since July 2010 through the end of last year. The upward revisions are likely to continue, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York, because job gains have been revised “sharply higher” in seven of the last eight expansions.
The size of the revisions to monthly job growth was bigger in the second half of 2011 than in the first, helping explain a jump in wages and salaries that may invigorate American households, whose spending accounts for about 70 percent of gross domestic product. Stronger consumer finances put the world’s largest economy in a better position to withstand rising higher costs and fallout from a slump in Europe.
“The revisions tell us that the household sector was in much better financial condition than we previously thought,” LaVorgna said in a telephone interview. “When you have extra income, people have more firepower.”
Companies added 216,000 workers to payrolls in February, up from a gain of 173,000 a month earlier, according to a report Wednesday from Roseland, N.J.-based ADP Employer Services.
The Labor Department in two days may say total payrolls rose by 210,000 last month, according to the median estimate of economists surveyed by Bloomberg News. It would mark the strongest three-month stretch in almost a year. The unemployment rate may have held at a three-year low of 8.3 percent.
Employers are reaching the limit of their ability to wring efficiency from their workforces, suggesting they may need to hire more staff. Worker productivity rose at a slower pace in the fourth quarter and labor costs jumped, revised figures from the Labor Department showed today.