NEW YORK (Chris Reese) - Economists at top financial institutions expect the U.S. unemployment rate to fall in 2011 and 2012 despite a surprisingly weak jobs report on Friday, a Reuters poll found on Friday.
Though the economists at primary dealers are calling for unemployment to remain at historically high levels through 2012, they ascribe only a 20 percent chance of the Federal Reserve undertaking another stimulus program of Treasuries purchases in the next two years, the poll found.
Most of the economists at primary dealers -- the 20 large financial institutions that do business directly with the Fed -- expect stubbornly high unemployment will contribute to the U.S. central bank holding official interest rates at current levels near zero through the first half of next year.
The poll was conducted after the government said on Friday that the unemployment rate rose to a six-month high of 9.2 percent in June, while non-farm payrolls grew by a mere 18,000 last month.
The lackluster jobs growth stunned most economists, as the median of forecasts was for growth of 90,000.
"It is a pretty jarring result, especially on the back of a weak May report," said Omair Sharif, U.S. economist with RBS Securities in Stamford, Connecticut. "But we know that a number of data sets are going to improve in the third quarter, especially in respect to the factory sector with auto production and so on.
"There is some evidence that things started to pick up in the second half of June," Sharif said.
In Friday's poll, the median of forecasts from 14 of the 18 economists who answered the primary dealer poll was for the U.S. unemployment rate to dip to 8.7 percent by the end of 2011.
The median of forecasts from 17 of the dealers was for a further dip to 8.4 percent by the middle of 2012, while the median from 18 of the dealers was a rate of 8.1 percent by the end of 2012.
Not all of the economists who responded to the poll answered all the questions.
"We have not adjusted our future outlook on monetary policy noting (June payrolls) could be related to transitory factors, and we will keep watching the data throughout the summer months before changing any of expectations," said Justin Lederer, Treasury analyst at Cantor Fitzgerald in New York.
The median of forecasts from 16 of the dealers gave a 20 percent chance the Fed will do a "QE3" type stimulus program in the next two years. That compares with a median of 10 percent in a similar poll conducted June 3.
The Fed's latest $600 billion program of Treasuries purchases, dubbed QE2, ended last week.
Thirteen of the 18 primary dealers who answered the poll expect the Fed to hold official interest rates steady at the current range of zero to 0.25 percent through the first half of 2012. A poll conducted on June 22 produced similar results, with 14 of 19 dealers calling for the Fed to keep rates on hold through the first half of next year.
Friday's payrolls data "provides more support for the view that the Fed will be on hold for a long time," said Dean Maki, chief economist at Barclays Capital in New York.
(Additional reporting by Emily Flitter and Pam Niimi; Editing by )
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