Employment Likely Cooled as U.S. Slowdown Hurt Confidence
Employment Probably Cooled as U.S. Slowdown Shook Confidence
Jonathan Alcorn/Bloomberg
Unemployment, which reached a 26-year high of 10.1 percent in October 2009, will average more than 9 percent through 2011.
Unemployment, which reached a 26-year high of 10.1 percent in October 2009, will average more than 9 percent through 2011. Photographer: Jonathan Alcorn/Bloomberg
Sept. 3 (Bloomberg) -- Robert Carnell, chief international economist at ING Financial Markets, talks about the outlook for the U.S. job market. Carnell, speaking with Deirdre Bolton on Bloomberg Television's "InsideTrack," also discusses his expectations for Federal Reserve monetary policy and stimulus spending. (Source: Bloomberg)
Sept. 3 (Bloomberg) -- Dean Baker, co-director of the Center for Economic and Policy Research, talks about the outlook for the U.S. unemployment rate. Baker, speaking with Deirdre Bolton and Peter Cook on Bloomberg Television's "InsideTrack," also discusses potential measures to stimulate economic growth. (Source: Bloomberg)
Sept. 3 (Bloomberg) -- Nouriel Roubini, chairman and co-founder of Roubini Global Economics LLC, talks about the outlook for the global economy and the possible impact of a double-dip recession or an increase in risk aversion on gold and currencies. He talks with Francine Lacqua in Cernobbio, Italy, on Bloomberg Television's "Countdown." (Source: Bloomberg)
Sept. 2 (Bloomberg) -- Edward McKelvey, senior U.S. economist at Goldman Sachs Group Inc., talks about the prospects for tomorrow's August U.S. jobs report and Federal Reserve actions to stimulate economic growth. McKelvey speaks with Betty Liu on Bloomberg Television’s “In the Loop." (Source: Bloomberg)
Sept. 3 (Bloomberg) -- Bob McDonald, chief executive officer of Procter & Gamble Co., talks about worker productivity and business growth. (This is an excerpt of the full interview. Source: Bloomberg)
Sept. 3 (Bloomberg) -- George Buckley, chief executive officer of 3M Co., talks about his company's growth strategy in Cernobbio, Italy. Buckley, speaking with Francine Lacqua on Bloomberg Television's "InsideTrack," also discusses his company's hiring practices and U.S. fiscal policy. (Source: Bloomberg)
Sept. 3 (Bloomberg) -- James Shugg, a senior economist at Westpac Banking Corp., talks about the outlook for the U.S. economy and the Labor Department’s nonfarm payrolls report today. The August payrolls report may show that the economy lost 105,000 jobs, the third straight monthly decline, according to the median forecast of 81 economists surveyed by Bloomberg News. Shugg speaks from Sydney with Rishaad Salamat on Bloomberg Television. (Source: Bloomberg)
Employment probably cooled in August as slower economic growth caused some U.S. companies to lose confidence the recovery will be sustained, economists said before a report today.
Private payrolls that exclude government agencies rose by 40,000 after a 71,000 July gain, and the jobless rate climbed to 9.6 percent, according to the median estimate of economists surveyed by Bloomberg News. Total employment may have dropped for a third consecutive month as census workers were let go.
“Companies are still absolutely devoted to cost control,” said Chris Low, chief economist at FTN Financial in New York. “The labor market has just gotten worse, and is consistent with consumer spending that’s treading water.”
Job cuts at companies like Northrop Grumman Corp. underscore the risk a retrenchment in hiring presents for American households, whose spending accounts for 70 percent of the economy. Federal Reserve Chairman Ben S. Bernanke last week said growth and employment have slowed more than projected, and the central bank “will do all that it can” to maintain the expansion.
The Labor Department’s report is scheduled for 8:30 a.m. New York time. Private payroll estimates of the 55 economists surveyed ranged from a decline of 12,000 to a 120,000 increase.
Overall payrolls fell by 105,000 last month, according to the survey median, reflecting the dismissal of temporary workers hired by the government to conduct the decennial population count. The jobless rate in July was 9.5 percent.
Slowing Services
Another report today may show services, the biggest part of the economy, expanded at a weaker pace.
The Tempe, Arizona-based Institute for Supply Management’s services gauge dropped in August to a six-month low of 53.2 from 54.3 the prior month, the median estimate of economists surveyed showed. Figures greater than 50 represent expansion for the industries that cover almost 90 percent of the economy.
The group’s factory report this week showed manufacturing unexpectedly picked up last month, propelled by gains in production and employment.
Economists forecast factory hiring climbed by 10,000 workers last month, the smallest gain this year.
The Standard & Poor 500 Index lost 4.7 percent last month, making it the worst August since 2001, as concern grew that the world’s largest economy was faltering. The Treasury 10-year note rallied the most on a monthly basis since late 2008.
The U.S. economy grew at a 1.6 percent annual pace in the second quarter after expanding at a 3.7 percent rate in the first three months of the year and 5 percent at the end of 2009.
Factory Cutbacks
Some manufacturers are shedding workers. Northrop Grumman’s shipbuilding unit last month announced 292 job cuts, with plans to slash another 350 by the end of the year, and United Technologies Corp.’s Pratt & Whitney jet engine unit will trim 129 hourly employees in Connecticut.
“We are seeing the worst economy in my 35-plus years” of industry experience, William Johnson, chief executive officer of H.J. Heinz Co., said on a conference call with analysts this week. “Consumer confidence has not returned.”
Heinz, the world’s biggest ketchup maker, is looking to boost sales overseas as U.S. are dining more at home, limiting restaurant traffic.
Voters are increasingly skeptical of the Obama administration’s economic policies heading into November elections that will determine which political party leads congress.
Obama’s ‘Central Mission’
“Our most urgent task is to restore our economy and put the millions of Americans who have lost their jobs back to work,” Obama said in a speech this week declaring the end of the U.S. combat mission in Iraq. “This will be difficult. But in the days to come, it must be our central mission as a people.”
The 650,000 increase in payrolls in the seven months through July shows it’ll take years to recoup the 8.4 million jobs lost during the recession that began in December 2007, the biggest employment slump in the post-World War II era.
Unemployment, which reached a 26-year high of 10.1 percent in October 2009, will average more than 9 percent through 2011, according to a Bloomberg survey.
“The painfully slow recovery in the labor market has restrained growth in labor income, raised uncertainty about job security and prospects, and damped confidence,” Bernanke said in a speech in Jackson Hole, Wyoming, on Aug. 27.
State and local government cutbacks in the face of mounting budget deficits are aggravating the problem. The number of workers employed by state and local agencies fell in July to the lowest levels since 2007. Miami, the seat of Florida’s most- populous county, on Aug. 31 imposed $76.9 million of salary, health-insurance and pension cuts on city employees to address a budget gap.
Bloomberg Survey
==============================================================
Nonfarm Private Unemploy ISM Non-
Payrolls Payrolls Rate Manu
,000’s ,000’s % Index
==============================================================
Date of Release 09/03 09/03 09/03 09/03
Observation Period Aug. Aug. Aug. Aug.
--------------------------------------------------------------
Median -105 40 9.6% 53.2
Average -98 40 9.6% 53.2
High Forecast 75 120 9.8% 55.5
Low Forecast -190 -12 9.5% 51.0
Number of Participants 81 55 79 67
Previous -131 71 9.5% 54.3
--------------------------------------------------------------
4CAST Ltd. -190 --- 9.6% 53.0
ABN Amro Bank -30 120 9.6% 54.0
Action Economics -90 --- 9.6% 54.5
Aletti Gestielle SGR -85 62 9.7% 53.0
Ameriprise Financial Inc -100 40 9.6% 53.5
Banesto -105 --- --- 54.1
Bank of Tokyo- Mitsubishi -125 12 9.6% 51.9
Barclays Capital -70 60 9.5% 53.0
Bayerische Landesbank -110 --- 9.6% 54.0
BBVA -90 50 9.6% 53.0
BMO Capital Markets -115 --- 9.6% 53.5
BNP Paribas -160 -10 9.7% 53.0
BofA Merrill Lynch Research -100 30 9.7% 53.5
Briefing.com -106 10 9.6% 51.0
Capital Economics -65 --- 9.6% 52.0
CIBC World Markets -120 --- 9.6% ---
Citi -120 --- 9.6% 52.0
ClearView Economics 75 100 9.5% 53.0
Commerzbank AG -100 50 9.6% 53.5
Credit Agricole CIB -106 60 9.6% ---
Credit Suisse -125 10 9.6% 53.0
DekaBank -80 40 9.6% 53.5
Desjardins Group -40 --- 9.6% 53.5
Deutsche Bank Securities -65 40 9.6% ---
Deutsche Postbank AG -90 --- 9.6% 54.0
DZ Bank -80 --- 9.6% 53.6
Exane -80 --- 9.7% ---
First Trust Advisors -55 75 9.5% 54.0
FLAR -70 55 --- ---
FTN Financial -115 30 9.5% 53.0
Goldman, Sachs & Co. -125 0 9.6% 53.0
Helaba -60 70 9.5% 53.5
High Frequency Economics -125 --- 9.6% 52.0
HSBC Markets -150 -5 9.7% 52.5
Hugh Johnson Advisors -50 --- 9.5% 54.0
Ibersecurities -130 32 --- ---
IDEAglobal -60 80 9.5% 55.0
IHS Global Insight -105 30 9.6% ---
Informa Global Markets -125 --- 9.6% 53.0
ING Financial Markets -150 50 9.7% 53.8
Intesa-SanPaulo -66 --- 9.6% 54.0
J.P. Morgan Chase -110 --- 9.7% 52.5
Janney Montgomery Scott -123 28 9.6% 53.2
Jefferies & Co. -115 45 9.6% 55.5
Landesbank Berlin --- --- 9.5% 52.0
Landesbank BW -70 90 9.5% 53.5
Maria Fiorini Ramirez -140 0 9.7% 53.5
MFC Global Investment -50 65 9.6% 53.0
Mizuho Securities -125 24 9.6% ---
Moody’s Economy.com -140 40 9.7% 53.1
Morgan Keegan & Co. -106 --- 9.5% ---
Morgan Stanley & Co. -75 50 9.6% ---
National Bank Financial 20 --- 9.5% 54.0
Natixis -80 --- 9.6% 53.5
Nomura Securities Intl. -105 15 9.7% 53.0
Nord/LB -130 20 9.6% 53.0
Paragon Research -112 10 9.7% ---
Pierpont Securities LLC -70 60 9.6% 52.5
PineBridge Investments -30 58 9.6% 53.5
PNC Bank -50 --- 9.7% 52.0
Prestige Economics -125 --- 9.7% 52.0
Raiffeisen Zentralbank -110 70 9.5% ---
Raymond James -95 35 9.6% 53.8
RBC Capital Markets -98 38 9.6% 52.0
RBS Securities Inc. -110 30 9.6% 53.8
Saxo Bank -125 5 9.6% ---
Scotia Capital -90 --- 9.6% 53.2
Societe Generale -80 50 9.6% ---
Standard Chartered -162 -12 9.6% 52.0
State Street Global Markets -112 36 9.7% 53.1
Stone & McCarthy Research -90 50 9.7% 53.9
TD Securities -150 20 9.8% 52.1
Thomson Reuters/IFR -85 45 9.6% 53.0
Tullett Prebon -95 55 9.6% 53.8
UBS -70 75 9.6% 53.0
Union Investment -100 --- 9.6% ---
University of Maryland -115 47 9.6% 54.8
Wells Fargo & Co. -107 48 9.6% 53.4
WestLB AG -90 --- 9.6% 54.0
Westpac Banking Co. -180 0 9.7% 52.0
Woodley Park Research -128 --- 9.5% 52.4
Wrightson ICAP -140 0 9.7% 54.0
==============================================================
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
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