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By Shobhana Chandra
June 5 (Bloomberg) -- Unemployment in the U.S. probably exceeded 9 percent in May for the first time in more than 25 years, underscoring the threat job losses pose for an economic recovery, a government report may show today.
The jobless rate jumped to 9.2 percent, the highest level since 1983, according to the median estimate of 75 economists in a Bloomberg News survey. Employers probably cut 520,000 workers from payrolls, the smallest decrease in seven months.
A deceleration in firings, coupled with stabilization in housing and manufacturing, signal the recession is easing. Still, Americans are spending less and saving more as home values fall and companies from American Express Co. to General Motors Corp. pare jobs, meaning any expansion may be muted.
“The worst is over for the job market and for the economy,” said John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina. “It’ll still be a tough environment. Firms are going to be cutting through the end of 2009, and it’ll take time for all those jobs to come back.”
The Labor Department report is due at 8:30 a.m. in Washington. Economists’ estimates for unemployment ranged from 9 percent to 9.4 percent. The rate was at 8.9 percent in April.
Forecasts for payrolls ranged from declines of 450,000 to 600,000. Job losses peaked at 741,000 in January, the most since 1949.
The world’s largest economy has already lost 5.7 million jobs since the recession began in December 2007. That’s the biggest drop in any post-World War II economic slump.
Bernanke on Jobs
The U.S. may suffer additional “sizable” job losses, Federal Reserve Chairman Ben S. Bernanke said this week in testimony to lawmakers. While economic growth will return “later this year,” he said, unemployment will rise “into next year.”
Manufacturers reduced payrolls by 150,000 in May, according to the median estimate of economists surveyed.
Markets are healing even as the economy is still struggling. The Standard & Poor’s 500 index is up 39 percent since reaching a 12-year low on March 9.
The bankruptcies of General Motors and Chrysler LLC may generate more job losses in coming months. AutoNation Inc., the largest U.S. new-vehicle retailer, plans to close seven showrooms, while Visteon Corp., the former parts-making unit of Ford Motor Co., and chassis manufacturer Metaldyne Corp. also filed for bankruptcy.
Wal-Mart Hiring
Other companies are looking to grow. Wal-Mart Stores Inc., the largest U.S. private employer, yesterday said it plans to add more than 22,000 jobs. The Bentonville, Arkansas-based retailer will hire store managers, pharmacists, cashiers and others for the 142 to 157 outlets it may open or expand in the 12 months through Jan. 31.
Recent reports indicate firings are slowing. Figures from Challenger, Gray & Christmas Inc. showed employers last month announced the fewest job cuts since September, while ADP Employer Services reported companies decreased payrolls by an estimated 532,000 workers, fewer than April.
Even so, rising unemployment and record wealth destruction mean consumer spending may not sustain the gains reported in the first quarter. Purchases fell in April as Americans boosted the savings rate to a 14-year high. Department stores Macy’s Inc. and Dillard’s Inc. and luxury chain Saks Inc. yesterday reported steeper-than-forecast sales declines for May.
‘Weak’ Environment
Stores are bracing for “a weak retail environment,” said Eric Wiseman, chief executive officer of VF Corp., the world’s largest clothing maker. Greensboro, North Carolina-based VF, which makes Wrangler jeans and JanSport backpacks, will trim inventories as it expects shipments to fall this year.
“Fear drives conservatism in consumer spending, and the biggest fear now is about losing jobs,” Wiseman said in an interview in May.
American Express, the largest U.S. credit-card company by purchases, will cut 4,000 positions as cardholders squeezed by job losses fail to pay debts.
Among other recent announcements, Continental Airlines Inc., the fourth-largest U.S. carrier, said it will drop about 500 jobs; KeyCorp, the second-largest Ohio-based bank, plans to eliminate more than 300 positions this quarter; and Lockheed Martin Corp., the world’s largest defense company, will cut 130 workers.
Bloomberg Survey
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Nonfarm Unemploy Manu Hourly
Payrolls Rate Payrolls Earnings
,000’s % ,000’s MOM%
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Date of Release 06/05 06/05 06/05 06/05
Observation Period May May May May
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Median -520 9.2% -150 0.1%
Average -522 9.2% -153 0.1%
High Forecast -450 9.4% -125 0.3%
Low Forecast -600 9.0% -200 0.0%
Number of Participants 76 75 17 52
Previous -539 8.9% -149 0.1%
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4CAST Ltd. -550 9.2% --- 0.2%
Action Economics -500 9.2% -160 0.2%
AIG Investments -500 9.2% --- 0.2%
Aletti Gestielle SGR -530 9.3% -150 ---
Ameriprise Financial Inc -550 9.3% -140 0.1%
Argus Research Corp. -495 9.1% -155 0.3%
Bank of Tokyo- Mitsubishi -515 9.3% --- 0.1%
Barclays Capital -500 9.2% --- 0.1%
BBVA -530 9.1% -141 0.1%
BMO Capital Markets -500 9.1% --- 0.1%
BNP Paribas -490 9.1% --- 0.1%
Briefing.com -525 9.2% --- 0.2%
CIBC World Markets -520 9.2% --- 0.2%
Citi -500 9.2% --- 0.2%
ClearView Economics -550 9.3% -135 0.2%
Commerzbank AG -500 9.3% --- 0.1%
Credit Suisse -500 9.3% --- 0.2%
Daiwa Securities America -550 9.2% --- ---
Danske Bank -570 9.3% --- ---
DekaBank -500 9.2% --- 0.1%
Desjardins Group -500 9.2% --- 0.1%
Deutsche Bank Securities -500 9.4% --- 0.1%
Deutsche Postbank AG -540 9.2% --- ---
DZ Bank -520 9.2% --- ---
First Trust Advisors -495 9.2% -145 0.2%
Fortis -560 9.1% --- ---
FTN Financial -550 9.2% --- 0.1%
Goldman, Sachs & Co. -475 9.2% --- 0.0%
Helaba -475 9.1% --- 0.2%
Herrmann Forecasting -493 9.2% -155 0.2%
High Frequency Economics -500 9.2% --- 0.2%
Horizon Investments -490 9.4% --- ---
HSBC Markets -500 9.2% --- 0.1%
IDEAglobal -475 9.2% -125 0.1%
IHS Global Insight -450 9.3% --- 0.2%
Informa Global Markets -600 9.3% -200 0.2%
ING Financial Markets -500 9.2% -150 0.2%
Intesa-SanPaulo -540 9.2% --- 0.2%
J.P. Morgan Chase -530 9.3% --- 0.1%
Janney Montgomery Scott L -544 9.0% --- ---
JPMorgan’s Private Wealth -500 9.2% --- 0.1%
Landesbank Berlin -480 9.3% --- 0.0%
Landesbank BW -580 9.1% --- ---
Lloyds TSB -500 9.2% --- 0.1%
Maria Fiorini Ramirez Inc -525 9.2% --- 0.1%
Merrill Lynch -465 9.2% --- 0.1%
MF Global -490 9.4% --- ---
MFC Global Investment Man -530 9.2% -165 0.0%
Mizuho Securities -600 9.3% --- ---
Moody’s Economy.com -525 9.3% -200 0.1%
Morgan Keegan & Co. -482 9.2% --- ---
Morgan Stanley & Co. -500 9.1% --- 0.2%
National Bank Financial -500 9.1% --- ---
Natixis -515 9.1% --- 0.1%
Newedge -510 9.1% --- ---
Nomura Securities Intl. -565 9.2% -125 0.2%
PNC Bank -500 9.2% -150 0.2%
Raymond James -520 9.3% --- 0.2%
RBS Securities Inc. -590 9.1% --- 0.2%
Ried, Thunberg & Co. -575 9.2% --- ---
Schneider Foreign Exchang -550 9.2% --- 0.1%
Scotia Capital -510 9.3% --- ---
Societe Generale -530 9.2% --- ---
Standard Chartered -550 9.2% --- ---
Stone & McCarthy Research -550 9.4% -150 0.2%
TD Securities -475 9.2% --- ---
Thomson Reuters/IFR -560 9.2% --- 0.2%
Tullett Prebon -580 9.2% --- 0.1%
UBS Securities LLC -450 9.2% --- ---
Unicredit MIB -575 --- --- ---
University of Maryland -561 9.2% -150 0.2%
Wachovia Corp. -540 9.4% --- ---
Wells Fargo & Co. -530 9.1% --- ---
WestLB AG -520 9.1% --- 0.1%
Westpac Banking Co. -520 9.3% --- ---
Wrightson Associates -575 9.2% --- 0.1%
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To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
Last Updated: June 5, 2009 00:00 EDT
