U.S. Joblessness Likely Held Near 10%, Highlighting Fed Worry
Joblessness Probably Held Near 10%, Highlighting Fed Concern
Matthew Staver/Bloomberg
A pool of 14.8 million out-of-work Americans is enabling employers to hold down wages, contributing to a slowdown in household spending that in turn is depressing inflation.
A pool of 14.8 million out-of-work Americans is enabling employers to hold down wages, contributing to a slowdown in household spending that in turn is depressing inflation. Photographer: Matthew Staver/Bloomberg
Nov. 5 (Bloomberg) -- James Shugg, a senior economist at Westpac Banking Corp., talks about the outlook for U.S. non-farm payrolls for October. Payrolls likely rose by 60,000, the first gain since May, according to a Bloomberg News survey of economists. Shugg speaks with Andrea Catherwood on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Nov. 5 (Bloomberg) -- Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc., talks about the U.S. labor market and economic outlook. Hatzius speaks with Deirdre Bolton on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Nov. 4 (Bloomberg) -- Edward McKelvey, senior U.S. economist at Goldman Sachs Group Inc., talks about the outlook for the U.S. labor market. McKelvey also discusses Federal Reserve monetary policy. He talks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)
Unemployment probably held near 10 percent in October, evidence of what the Federal Reserve called the “disappointingly slow” U.S. recovery, economists said before a report today.
The jobless rate was 9.6 percent for a third month, according to the median of 80 estimates in a Bloomberg News survey. Unemployment has been at 9.5 percent or higher since August 2009, a record stretch of such elevated readings since monthly data began six decades ago. Payrolls likely rose by 60,000, the first gain since May, economists also predicted.
A pool of 14.8 million out-of-work Americans is enabling employers to hold down wages, contributing to a slowdown in household spending that in turn is depressing inflation. Fed policy makers this week announced a second round of large-scale asset purchases to lower borrowing costs, revive growth and prevent a protracted drop in prices.
“We have a deep hole to dig out of,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “It’ll be years before we get back to where we started. It confirms the Fed’s view that we’re stuck in a slow- motion recovery.”
The Labor Department’s report is scheduled for 8:30 a.m. Washington time. Estimates for the jobless rate ranged from 9.5 percent to 9.7 percent.
“The pace of recovery in output and employment continues to be slow,” Fed policy makers said in a statement on Nov. 3 when they announced a program of $600 billion in Treasury securities purchases through next June. “Employers remain reluctant to add to payrolls,” and “the unemployment rate is elevated.”
Fed Action
The central bank has already cut interest rates almost to zero and bought $1.7 trillion in securities. Expectations its latest steps will revive growth, and announcements of growing corporate profits helped drive the Standard & Poor’s 500 Index to a two-year high yesterday.
Private hiring, which excludes government agencies, rose by 80,000 after a 64,000 gain in September, according to the survey median. Factory payrolls climbed by 5,000 workers last month after a 6,000 September decrease, economists forecast.
Today’s report will be the first this year in which changes in temporary government staffing for the decennial census play almost no role. About 6,000 workers remained on the federal payroll as the population count wound down in the September employment survey week, down from a peak of 586,000 in May.
Growth Slowdown
One reason why hiring isn’t gaining speed is the economy’s inability to sustain the recovery’s early growth rate. Gross domestic product expanded at an average 1.9 percent annual pace in the six months ended in September, compared with 4.4 percent in the previous two quarters.
Growth in the 2.5 percent to 2.8 percent range is consistent with keeping the jobless rate stable, according to the Fed’s long-term forecasts.
Employers are also limiting workers’ pay. Hourly earnings grew 1.6 percent on average over the past 12 months, the smallest gain since records began in 2007, according to the Bloomberg survey median.
It’ll also take time to make up for the loss of more than 8 million jobs, a result of the worst recession since the 1930s. The damage fueled Americans’ discontent with the economy, a central issue in the Nov. 2 elections that helped Republicans take the House of Representatives. Democrats retained control of the Senate by a smaller margin.
Retail Hiring
The job market may get some lift as retailers take on extra workers for the holiday shopping season starting this month. Department store chain Kohl’s Corp. plans to hire about 40,000 people for the holiday period, 21 percent more than last year. Toys ‘R’ Us Inc. said it may add about 45,000 employees for the season, including 10,000 at its temporary stores.
Others are starting to plan ahead. Rockwell Collins Inc., a Cedar Rapids, Iowa-based maker of cockpit instruments and radios, on Oct. 29 said it will hire 800 people, boosting staff by 4 percent during the next 12 months. Ford Motor Co., the second-largest U.S. automaker, plans to add 1,200 jobs in Michigan by 2013 as sales rebound.
Bloomberg Survey
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Nonfarm Private Unemploy Hourly
Payrolls Payrolls Rate Earnings
,000’s ,000’s % YOY%
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Date of Release 11/05 11/05 11/05 11/05
Observation Period Oct. Oct. Oct. Oct.
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Median 60 80 9.6% 1.6%
Average 60 82 9.6% 1.6%
High Forecast 125 135 9.7% 1.8%
Low Forecast 0 20 9.5% 1.5%
Number of Participants 83 55 80 11
Previous -95 64 9.6% 1.7%
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4CAST Ltd. 65 --- 9.6% ---
ABN Amro Inc. 85 110 9.6% ---
Action Economics 60 70 9.6% ---
Aletti Gestielle SGR 72 76 9.5% ---
Ameriprise Financial 50 80 9.6% 1.8%
Banesto 60 --- --- ---
Bank of Tokyo- Mitsubishi 105 105 9.6% ---
Bantleon Bank AG 60 80 9.6% ---
Barclays Capital 60 85 9.6% 1.6%
Bayerische Landesbank 50 --- 9.6% ---
BBVA 68 83 9.6% ---
BMO Capital Markets 35 65 9.7% ---
BNP Paribas 80 100 9.7% ---
BofA Merrill Lynch Research 35 65 9.7% ---
Briefing.com 25 50 9.7% ---
Capital Economics 50 --- 9.7% 1.6%
CIBC World Markets 60 --- 9.7% ---
Citi 50 --- 9.7% ---
Commerzbank AG 50 70 9.6% ---
Credit Agricole CIB 55 75 9.6% ---
Credit Suisse 55 90 9.6% ---
Daiwa Securities America 75 --- 9.7% ---
DekaBank 50 --- 9.6% 1.6%
Desjardins Group 69 --- 9.7% ---
Deutsche Bank Securities 80 90 9.5% ---
Deutsche Postbank AG 70 --- 9.6% ---
DZ Bank 75 --- 9.6% ---
Exane 50 --- 9.7% ---
First Trust Advisors 97 121 9.6% ---
FTN Financial 43 70 9.6% ---
Goldman, Sachs & Co. 25 75 9.6% ---
Helaba 55 75 9.6% 1.6%
High Frequency Economics 25 75 9.6% ---
HSBC Markets 40 75 9.7% ---
Hugh Johnson Advisors 25 --- 9.6% ---
IDEAglobal 90 110 9.6% ---
IHS Global Insight 100 100 9.7% ---
Informa Global Markets 70 85 9.6% ---
ING Financial Markets 50 80 9.6% 1.7%
Insight Economics 85 --- 9.7% ---
Intesa-SanPaulo 65 --- 9.6% ---
J.P. Morgan Chase 110 90 9.6% 1.5%
Janney Montgomery Scott 45 60 9.6% ---
Jefferies & Co. 65 105 9.6% ---
Landesbank Berlin 80 --- 9.7% ---
Landesbank BW 95 135 9.5% ---
Maria Fiorini Ramirez 60 80 9.6% ---
MF Global 60 90 9.6% ---
MFC Global Investment 25 --- 9.6% 1.5%
Mizuho Securities 25 --- 9.6% ---
Moody’s Analytics 80 100 9.7% ---
Morgan Keegan & Co. 76 --- 9.6% ---
Morgan Stanley & Co. 70 90 9.6% ---
National Bank Financial 75 --- 9.6% ---
Natixis 60 --- 9.7% 1.7%
Nomura Securities Intl. 90 90 9.5% ---
Nord/LB 40 80 9.6% ---
Paragon Research 60 --- 9.6% ---
Pierpont Securities LLC 125 105 9.6% ---
PineBridge Investments 75 --- 9.5% ---
PNC Bank 75 --- 9.7% ---
Prestige Economics 20 75 9.6% ---
Raiffeisen Zentralbank 50 65 9.7% ---
Raymond James 80 70 9.6% ---
RBC Capital Markets 50 80 9.6% ---
RBS Securities Inc. 75 105 9.6% ---
Saxo Bank 65 85 9.6% ---
Scotia Capital 70 --- --- ---
Societe Generale 0 20 9.6% ---
Standard Chartered 20 40 9.6% 1.6%
State Street Global Markets 81 96 9.6% 1.6%
Stone & McCarthy Research 50 85 9.5% ---
TD Securities 60 77 9.7% ---
Thomson Reuters/IFR 80 95 9.6% ---
Tullett Prebon 30 75 9.6% ---
UBS 70 75 --- ---
UniCredit Research 50 --- 9.7% ---
Union Investment 10 --- 9.6% ---
University of Maryland 0 81 9.7% ---
Wells Fargo & Co. 29 58 9.6% ---
WestLB AG 70 --- 9.6% ---
Westpac Banking Co. 20 50 9.7% ---
Wrightson ICAP 80 100 9.6% ---
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To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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