Hiring probably picked up in April after the weakest gain in five months, and the U.S. jobless rate stayed at 8.2 percent, showing improvement in the labor market, economists said before reports this week.

Payrolls climbed by 165,000 workers after a 120,000 gain in March, according to the median forecast of 64 economists surveyed by Bloomberg News before Labor Department data due Friday. Manufacturing and services grew at a slower pace, other reports may show.

Bigger gains in hiring and wages gains are needed to sustain household purchases, which increased in the first quarter at the fastest pace in more than a year. Joblessness exceeding 8 percent for more than three years helps explain why Federal Reserve policy makers are sticking to a plan that holds borrowing costs low through late 2014 to spur growth.

“The labor market is not going to roar, but it’ll keep improving,” said Carl Riccadonna, a senior U.S. economist at Deutsche Bank Securities Inc. in New York. “The economy is growing at a rate where job creation is inevitable. To increase output, businesses have to add workers.”

Growth led by persistent gains in household purchases would help lay the groundwork for hiring. The economy expanded at a 2.2 percent annual rate in the first quarter after a 3 percent pace in the prior three months, the Commerce Department reported on April 27. Consumer spending climbed 2.9 percent, the fastest pace since the end of 2010.

A Commerce Department report due Monday will provide details of how consumption fared at the end of last quarter. Spending may have grown 0.4 percent in March, half as much as February’s 0.8 percent gain that was the biggest in seven months, according to the Bloomberg survey median. Incomes rose 0.3 percent, following a 0.2 percent increase, economists said.

Retail Sales

Better-than-forecast retail sales at chains like Gap Inc. and Target Corp. in March, together with a surge in demand for cars, indicate Americans are taking higher gasoline costs in stride. Automobiles sold last quarter at the fastest pace in four years, according to industry data. At the same time, the pace cooled in March from a month earlier.

Growing demand is generating employment. Volkswagen AG’s U.S. financing arm said it will expand its Illinois office, adding about 150 new jobs through 2018, as the German automaker grows its American business. VW Credit Inc. on April 20 broke ground on a 30,000-square-foot expansion to about double the size of its facility in Libertyville, Illinois.

Investors are turning more optimistic as earnings improve along with the economy. The Standard & Poor’s 500 Index has climbed almost 12 percent in 2011.

Faster job growth may help President Barack Obama fend off criticism from Republican challenger Mitt Romney, who has said White House policies have done little to help American workers. Employment and the economy are a central theme in the campaign.

Private Employment

Private payrolls, which exclude government jobs, climbed 170,000 after rising 121,000 in March, economists forecast the Labor Department report will show.

The projected gain in total payrolls would bring the average for this year to 200,000, compared with 206,750 in the first four months of 2011.

The jobless rate, derived from a separate survey of households, held at a three-year low of 8.2 percent in April, economists in the Bloomberg survey predicted. Unemployment has exceeded 8 percent since February 2009, the longest such stretch since monthly records began in 1948.

“Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated,” the Federal Open Market Committee said in an April 25 statement. The group “expects economic growth to remain moderate over coming quarters and then to pick up gradually,” and “anticipates that the unemployment rate will decline gradually.”

Fed Projections

Fed officials also reduced forecasts for the jobless rate, to an average 7.8 percent to 8 percent in the fourth quarter compared with a January projection of 8.2 percent to 8.5 percent, according to central tendency estimates released April 25. The new forecasts are still above policy makers’ estimates for full employment, which range from 5.2 percent to 6 percent.

Through March, the economy had recovered about 3.6 million of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009.

CSX Hiring

CSX Corp., the biggest U.S. eastern railroad, said it is hiring people mainly to keep headcount stable.

“Last year, you may recall we hired 4,000 people --roughly 3,000 was attrition, the other 1,000 was evenly split between train and engine crews to move the products” and others to install safety systems, Michael Ward, chief executive officer at CSX, said in an April 18 interview. “This year the 3,000 will be largely attrition.”

Companies paring staff include H&R Block Inc., the biggest U.S. tax preparer, which plans to cut 350 jobs and close about 200 company-owned offices. AMR Corp.’s American Airlines this month said it will eliminate 1,200 airport agent, baggage and cargo jobs as part of a bankruptcy restructuring plan to trim annual labor spending by $1.25 billion.

One driver of growth that is easing is manufacturing, which accounts for about 12 percent of the economy. The Institute for Supply Management Inc.’s factory index fell to 53 this month from 53.4 in March, according to the Bloomberg survey median ahead of Tuesday's report. A reading above 50 signals expansion.

The Tempe, Arizona-based ISM group’s gauge of service industries, to be released on Thursday, was little changed in April at 55.5 after 56, economists projected.