Reuters News - Sturdy U.S. jobs report seen, could keep June rate hike on table

People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York October 7, 2014.

CREDIT: REUTERS/SHANNON STAPLETON

(Reuters) - U.S. employment likely rose strongly in February with the jobless rate slipping, signs that could encourage the Federal Reserve to consider hiking interest rates in June.

A Reuters survey of economists forecast a 240,000 increase in nonfarm payrolls after a 257,000 gain in January. That would mark the 12th straight month of job increases above 200,000, the longest such run since 1994.

"The jobs picture remains extraordinary healthy," said Jacob Oubina, an economist at RBC Capital Markets in New York.

The jobless rate was forecast to fall one-tenth of a percentage point to 5.6 percent, while average hourly earnings were seen rising 0.2 percent after jumping 0.5 percent in January.

Fed officials are monitoring pay closely to help determine when enough pressure is building in the jobs market to merit higher borrowing costs to keep the economy from overheating.

The Labor Department will release the jobs data at 8:30 a.m. on Friday, little more than a week before the U.S. central bank's March 17-18 policy meeting. Many economists expect the Fed could signal its openness to a June rates lift-off by dropping a pledge to be "patient" in considering a hike.

The anticipated pullback in earnings growth will probably not be an issue for the Fed given other signs that wage pressures are building, economists say.

Wal-Mart (WMT.N), the world's largest retailer, announced last month it would spend more than $1 billion this year to increase pay for about 40 percent of its U.S. workforce. Other companies, like TJX Cos Inc (TJX.N) and health insurer Aetna (AET.N), have also announced wage increases.

SNOWY WEATHER

"We have started to see the potential for an increase in wages. That's really what the Fed is looking for," said Tim Hopper, chief economist at TIAA-CREF in New York.

The Fed has kept overnight rates near zero since December 2008. The economy added more than one million jobs between November and January, the strongest three-month stretch since 1997, while the number of jobs seekers for each open position hit its lowest level since 2007 in December.

Cold and snowy weather that blanketed large parts of the country in February is likely to have a minimal impact on the job count as the adverse conditions set in after the government surveyed employers, economists said.

A strike by 5,200 workers at some petroleum refineries is also likely to have a marginal effect.

"The snowstorms ... may depress payrolls modestly, likely by less than 10,000 jobs," said Daniel Silver, an economist at JPMorgan in New York.

A sturdy report would reinforce the view that a recent slowdown in economic growth reflects temporary factors, such as the weather and a now-settled labor dispute at West Coast ports.

The economy has also taken a hit from cuts in capital spending by oil companies, whose profits are being squeezed by lower crude prices. Oil and gas extraction employment likely declined further after falling 1,900 in January.

Overall, private payrolls are expected to have increased 229,000, with manufacturing employment rising 12,000. Further increases in construction payrolls are expected, though bad weather could have curbed gains.

Government payrolls are seen rising 10,000.

(Reporting by Lucia Mutikani; Editing by Meredith Mazzilli)