SYMBOL LOOKUP
HOME
By Shobhana Chandra
July 2 (Bloomberg) -- Employers in the U.S. probably cut an additional 365,000 jobs in June, a government report may show today, offering little evidence the Obama administration’s stimulus package is shoring up the labor market.
The payroll decline would follow a 345,000 drop in May, according to the median estimate of 79 economists in a Bloomberg News survey. The jobless rate likely climbed to 9.6 percent, the highest since 1983.
Unemployment is projected to keep rising for the rest of the year just as the income boost from the stimulus package fades, undermining prospects for a sustained rebound in household purchases, analysts said. As companies from General Motors Corp. to Kimberly-Clark Corp. cut costs, the lack of jobs will limit any recovery.
“It’s a tough labor market to be sure,” said Carl Riccadonna, a senior economist at Deutsche Bank Securities Inc. in New York. “It raises the risk of a potential double-dip in consumer spending. Rising unemployment makes it very sensitive politically.”
The Labor Department report is due at 8:30 a.m. in Washington. Economists’ forecasts for payroll declines ranged from 150,000 to 500,000. Job losses peaked at 741,000 in January, the most since 1949.
The yield on the benchmark 10-year note has dropped since reaching a seven-month high of 3.95 percent on June 10 on growing concern that any economic recovery will be muted. The yield was at 3.54 percent late yesterday.
Biggest Slump
The payroll projection for June would extend the employment slump since the recession began in December 2007 to 6.3 million, the biggest loss in the post-World War II era.
Estimates for the unemployment rate ranged from 9.3 percent to 9.7 percent, compared with May’s 9.4 percent. By the end of the year, unemployment will reach 10 percent, according to the median forecast of economists surveyed last month.
Unemployment will “remain painfully high for several more years,” Federal Reserve Bank of San Francisco President Janet Yellen said this week. “I expect that we will turn the growth corner sometime later this year, but I am not optimistic that the economy will spring back to normal any time soon.”
Tax cuts and Social Security payments under the stimulus plan propped up incomes last quarter, supporting household purchases. Consumer spending rose in May as earnings climbed 1.4 percent, the most in a year.
Save More
Still, the wealth destruction caused by the housing and stock-market slumps prompted Americans to rebuild nest eggs. The savings rate in May surged to a 15-year high.
Household purchases, which account for about 70 percent of the economy, dropped at a 0.6 percent annual rate last quarter before growing again in the second half of the year, according to the median forecast of economists surveyed by Bloomberg in early June. Purchases rose at a 1.4 percent pace in the first three months of 2009.
Manufacturers probably reduced payrolls by 150,000 in June, the survey showed. More firings are in the works following the bankruptcies of GM and Chrysler LLC as shutdowns ripple through auto-parts makers and car dealers.
The auto industry isn’t alone in trimming jobs. Kimberly- Clark, the maker of Huggies diapers and Kleenex tissues, plans to cut 1,600 jobs worldwide by year-end. About 800 salaried employees will leave Deere & Co., the world’s largest maker of agricultural equipment, under a voluntary program.
‘Difficult’ Actions
“These actions, while difficult, are necessary to help us emerge from this demanding economic environment,” Kimberly- Clark’s Chairman and Chief Executive Officer Tom Falk said in a June 25 statement. The company’s net income has declined for six straight quarters.
3M Co., the maker of Post-it Notes and Scotch Tape, reduced positions and offered early retirement to workers, while Dow Chemical Co., the largest U.S. chemical maker, is cutting jobs following the acquisition of Rohm & Haas Co.
Service providers and government agencies are also looking to lower costs. Gannett Co., the largest U.S. newspaper publisher, yesterday announced it will eliminate about 1,400 jobs by July 9. California Governor Arnold Schwarzenegger said he’ll force state workers to take a third unpaid day off every month to conserve cash and will order lawmakers into an emergency session to tackle the state’s growing budget deficit.
Bloomberg Survey
================================================================
Nonfarm Unemploy Manu Initial
Payrolls Rate Payrolls Claims
,000’s % ,000’s ,000’s
================================================================
Date of Release 07/02 07/02 07/02 07/02
Observation Period June June June 27-Jun
----------------------------------------------------------------
Median -365 9.6% -150 615
Average -361 9.6% -148 616
High Forecast -150 9.7% -120 630
Low Forecast -500 9.3% -175 600
Number of Participants 79 75 20 38
Previous -345 9.4% -156 627
----------------------------------------------------------------
4CAST Ltd. -300 9.5% --- 615
Action Economics -340 9.6% -145 ---
AIG Investments -289 9.6% --- ---
Aletti Gestielle SGR -403 9.7% -152 620
Ameriprise Financial Inc -385 9.6% -150 ---
Argus Research Corp. -395 9.6% -160 ---
Bancolombia SA -362 9.6% --- ---
Banesto -380 --- --- 625
Bank of Tokyo- Mitsubishi -325 9.6% --- 618
Bantleon Bank AG -400 9.7% --- ---
Barclays Capital -325 9.6% -150 610
BBVA -385 9.6% -153 610
BMO Capital Markets -300 9.6% --- 610
BNP Paribas -300 9.6% --- ---
Briefing.com -400 9.6% --- 605
C I T I C Securities -250 9.5% --- ---
Calyon -440 9.7% --- ---
Capital Economics -350 9.6% --- ---
CIBC World Markets -375 9.6% --- ---
Citi -400 9.6% --- 630
ClearView Economics -400 9.7% -175 ---
Commerzbank AG -380 9.6% --- 630
Credit Suisse -325 9.5% --- 625
Daiwa Securities America -400 --- --- ---
Danske Bank -270 9.6% --- ---
DekaBank -340 9.6% --- ---
Desjardins Group -290 9.7% --- 620
Deutsche Bank Securities -325 9.6% --- ---
Deutsche Postbank AG -390 9.6% --- ---
DZ Bank -325 9.7% --- ---
Exane -300 9.6% --- ---
First Trust Advisors -225 9.6% -120 619
Fortis -360 9.6% --- ---
Goldman, Sachs & Co. -425 9.7% --- ---
Herrmann Forecasting -359 9.6% --- 610
High Frequency Economics -250 9.6% --- 610
Horizon Investments -150 9.6% --- ---
HSBC Markets -350 9.6% --- 605
IDEAglobal -315 9.6% -135 610
IHS Global Insight -300 9.6% --- ---
Informa Global Markets -400 9.7% -135 615
ING Financial Markets -300 9.6% -120 615
Insight Economics -400 9.6% --- 615
Intesa-SanPaulo -350 9.5% --- ---
J.P. Morgan Chase -290 9.6% -150 615
Johnson Illington Advisor -500 9.5% -150 ---
Landesbank BW -500 9.7% --- ---
Maria Fiorini Ramirez Inc -400 9.6% --- 625
Merrill Lynch -425 9.6% --- ---
MFC Global Investment Man -400 9.6% -160 610
Mizuho Securities -400 9.6% --- 630
Moody’s Economy.com -400 9.5% -150 620
Morgan Keegan & Co. -378 9.6% --- ---
Morgan Stanley & Co. -350 9.6% --- 620
National Bank Financial -280 9.4% --- ---
Natixis -300 9.5% --- ---
Nomura Securities Intl. -350 9.7% -125 ---
PNC Bank -350 9.6% -175 ---
RBC Capital Markets -365 9.5% --- ---
RBS Securities Inc. -350 9.6% --- 615
Ried, Thunberg & Co. -450 --- --- 620
Schneider Foreign Exchang -365 9.6% --- 600
Scotia Capital -450 9.7% --- 630
SJS Markets LTD -310 9.6% --- ---
Societe Generale -327 9.5% --- ---
Standard Chartered -380 9.6% --- ---
Stone & McCarthy Research -435 9.6% -154 625
TD Securities -300 --- --- 615
Thomson Reuters/IFR -415 9.6% --- 610
Tullett Prebon -395 9.6% --- 620
UBS Securities LLC -425 9.6% -150 610
Unicredit MIB -450 9.5% --- ---
University of Maryland -390 9.7% -150 610
Wachovia Corp. -370 9.6% --- ---
Wells Fargo & Co. -370 9.6% --- ---
WestLB AG -350 9.6% --- ---
Westpac Banking Co. -400 9.6% --- 610
Woodley Park Research -392 9.3% --- ---
Wrightson Associates -450 9.6% --- 620
================================================================
To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
Last Updated: July 2, 2009 00:00 EDT
