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Gain in U.S. Payrolls Probably Too Small to Cut Unemployment

A projected gain in U.S. payrolls in September was probably too small to bring down the unemployment rate as concern mounted that the global recovery was losing momentum, economists said before a report today.

Employment climbed by 55,000 workers after no change in August, according to the median forecast of 91 economists surveyed by Bloomberg News. The jobless rate was 9.1 percent for a third consecutive month, according to the forecasts.

The debt crisis in Europe, political gridlock in the U.S. and plunging stock prices have led to a drop in consumer and business confidence that may keep hurting spending and hiring. The risk that the world’s largest economy may fall back into a recession has prompted the Federal Reserve and President Barack Obama to announce further measures to sustain the expansion.

“Businesses remain reluctant to add workers,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “Much of the weakness in hiring can be blamed on uncertainty.”

Unemployment has exceeded 8 percent since February 2009, the longest stretch of such elevated joblessness since monthly records began in 1948.

Private payrolls, which exclude government jobs, rose 90,000 after a gain of 17,000 in the prior month, economists forecast the employment report will also show.

While a labor dispute at Verizon Communications Inc. (VZ) depressed employment in August, its resolution may have added about 45,000 workers back to payrolls last month, according to John Herrmann, senior fixed-income strategist at State Street Global Markets LLC in Boston.

State Workers

Conversely, the return of state government workers in Minnesota lifted the August payroll count by 23,000, a boost that wasn’t repeated last month.

The economy expanded at a 1.3 percent pace in the second quarter following a 0.4 percent gain in the first three months of 2011, the weakest performance in two years, the Commerce Department reported last week. Consumer spending grew 0.7 percent, the least since the last three months of 2009.

Jan Hatzius, chief economist at Goldman Sachs Group Inc. in New York, says the odds of a renewed U.S. recession are rising as confidence and spending have slumped. This week he said he saw a 40 percent chance the U.S. would slip back into a recession over the next year.

Julia Coronado, chief economist for North America at BNP Paribas in New York, forecasts a “mild recession.”

The projected gain in total payrolls would bring the average from July through September to 47,000, down from 97,000 in the second quarter and 166,000 in the first three months of the year.

200,000 a Month

Sustained increases of around 200,000 a month are needed to bring unemployment down about a percentage point over a year, according to Eric Green, chief market economist at TD Securities Inc. in New York.

Through August, the economy had recovered about 1.9 million of the 8.75 million jobs lost as a result of the 18-month recession that ended in June 2009.

“Economic growth remains slow,” Fed policy makers said Sept. 21 as they announced a plan to bring down longer-term lending rates. While officials said they “expect some pickup in the pace of recovery over coming quarters,” they anticipate “the unemployment rate will decline only gradually.”

Obama last month proposed a $447 billion jobs plan that economists surveyed by Bloomberg forecast would help avoid a return to recession by maintaining growth and pushing down the unemployment rate next year.

Stock Market

The Standard & Poor’s 500 Index had its biggest quarterly drop from July through September since 2008 on concern the recovery will falter. It’s climbed 6 percent so far this week. Futures expiring in December fell 0.2 percent from yesterday to 1,155.2 as of 10:33 a.m. in London.

Citigroup Inc. (C), the third-biggest U.S. bank, is among firms that have turned more cautious about hiring. It said last month it will limit hiring to only “critical” jobs as the economic slowdown continues and revenue slumps.

“We are currently only filling positions we believe are critical to the line of business or function,” Shannon Bell, a spokeswoman for the New York-based bank, said in an interview Sept. 15.

Nonetheless, some companies are planning to boost payrolls. Ford Motor Co. (F) this week said it has committed to add 12,000 hourly jobs in its U.S. manufacturing plants by 2015 as part of an agreement with the United Auto Workers.

Ford said it will be “in-sourcing” jobs from Mexico, China and Japan. Ford said this will be 5,750 hourly jobs more than a previously announced 7,000 positions to be added by the end of 2012.

                        Bloomberg Survey

==============================================================
                           Nonfarm  Private     Manu Unemploy
                          Payrolls Payrolls Payrolls     Rate
                            ,000’s   ,000’s   ,000’s        %
==============================================================
Date of Release              10/07    10/07    10/07    10/07
Observation Period           Sept.    Sept.    Sept.    Sept.
--------------------------------------------------------------
Median                          55       90        0     9.1%
Average                         55       94        1     9.1%
High Forecast                  115      157       20     9.2%
Low Forecast                   -50       50      -15     9.0%
Number of Participants          91       49       23       86
Previous                         0       17       -3     9.1%
--------------------------------------------------------------
4CAST                           20       60     ---      9.2%
ABN Amro                        60       80     ---      9.1%
Action Economics               100      130       -5     9.1%
Aletti Gestielle                90      129       -2     9.1%
Ameriprise Financial            40       55       -5     9.2%
Banesto                         70     ---      ---      ---
Bank of Tokyo- Mitsubishi       80      110     ---      9.1%
Bantleon Bank AG                40     ---      ---      9.1%
Barclays Capital                25       65        5     9.1%
Bayerische Landesbank           70     ---      ---      9.1%
BBVA                            60       75     ---      9.1%
BMO Capital Markets             40     ---      ---      9.2%
BNP Paribas                      0       50     ---      9.2%
BofA Merrill Lynch              70       90     ---      9.1%
Briefing.com                    50       90     ---      9.1%
Capital Economics                0     ---      ---      9.1%
CIBC World Markets              65     ---        -3     9.2%
Citi                            50      110        5     9.1%
ClearView Economics             80      110       10     9.2%
Commerzbank AG                  75     ---      ---      9.1%
Credit Agricole CIB              0     ---      ---      ---
Credit Suisse                   35     ---      ---      9.2%
Daiwa Securities America        95     ---      ---      9.1%
DekaBank                        35     ---      ---      9.2%
Desjardins Group                15     ---      ---      9.1%
Deutsche Bank Securities        70       95     ---      9.1%
Deutsche Postbank AG            70     ---      ---      9.1%
DZ Bank                         52     ---      ---      9.1%
Exane                           20     ---      ---      9.2%
Fact & Opinion Economics        50       60     ---      9.2%
First Trust Advisors            80      110        0     9.2%
FTN Financial                   80      120     ---      9.1%
Goldman, Sachs & Co.            50     ---      ---      9.1%
Helaba                         100     ---      ---      9.1%
High Frequency Economics         0       50     ---      9.2%
HSBC Markets                    50       80     ---      9.2%
Hugh Johnson Advisors          102      120       10     9.1%
IDEAglobal                      50       75       -5     9.1%
IHS Global Insight              25     ---      ---      9.2%
Informa Global Markets          15       55        5     9.1%
ING Financial Markets           40       85       -8     9.1%
Insight Economics               75     ---      ---      9.2%
Intesa-SanPaulo                 70     ---      ---      9.2%
Iur Capital                    -30     ---      ---      ---
J.P. Morgan Chase               30       90        0     9.2%
Janney Montgomery Scott         76       94        0     9.1%
Jefferies & Co.                 70      115       20     9.0%
JH Cohn                         40       50     ---      ---
Landesbank Berlin              105     ---      ---      9.1%
Landesbank BW                   70     ---      ---      9.1%
Laurentian Bank                 95      120     ---      9.1%
LCA Consultores                  9     ---      ---      ---
Manulife Asset Management       50     ---        -5     9.1%
Maria Fiorini Ramirez           85      115     ---      9.1%
Market Securities               20     ---      ---      9.1%
MET Capital Advisors           -50     ---      ---      9.2%
MF Global                       85      135        0     9.2%
Mizuho Securities               75     ---      ---      9.2%
Moody’s Analytics               60      100      -15     9.1%
Morgan Keegan & Co.             70     ---      ---      9.2%
Morgan Stanley & Co.           100     ---      ---      9.2%
National Bank Financial        110     ---      ---      9.1%
Natixis                         40     ---      ---      9.1%
Nomura Securities               60       80        5     9.1%
Nord/LB                         50       80      -10     9.1%
OSK Group/DMG                   35     ---      ---      9.2%
Paragon Research                25     ---      ---      9.2%
Parthenon Group                 35       54     ---      9.1%
Pierpont Securities            110      135     ---      9.1%
PineBridge Investments          25       50     ---      9.2%
PNC Bank                        65     ---      ---      9.2%
Prestige Economics              35       70     ---      9.1%
Raiffeisenbank International    85      130     ---      9.2%
Raymond James                   90      115     ---      9.1%
RBC Capital Markets             45       65     ---      9.2%
RBS Securities                  30     ---      ---      9.1%
Scotia Capital                  30     ---      ---      9.1%
SMBC Nikko Securities           45       85     ---      9.1%
Societe Generale               115      155     ---      9.0%
Standard Chartered              55       90     ---      9.1%
State Street Global Markets     71      104        1     9.1%
Stone & McCarthy Research      100      157       15     9.1%
TD Securities                   60       85     ---      9.1%
UBS                             65      115     ---      9.1%
UniCredit Research              50     ---      ---      9.2%
Union Investment                40     ---      ---      9.1%
University of Maryland          80      100        0     9.1%
Wells Fargo & Co.               35     ---      ---      9.1%
WestLB AG                       70     ---      ---      9.1%
Westpac Banking Co.             30     ---      ---      9.2%
Wrightson ICAP                  90      125     ---      9.1%
==============================================================

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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