Unemployment in U.S. Probably Rose as Recovery Can't Generate Enough Jobs
The jobless rate probably rose in September for a second month as the year-old U.S. recovery failed to generate enough jobs to keep up with a growing labor force, economists said before a report this week.
Unemployment climbed to 9.7 percent from 9.6 percent in August, according to the median estimate of 62 economists surveyed by Bloomberg News ahead of an Oct. 8 report from the Labor Department. The data may also show companies added 77,000 workers to payrolls, and total hiring stagnated amid cuts in government staffing as the decennial census wound down.
A lack of jobs is restraining consumer spending, the biggest part of the economy, and underscores the Federal Reserve’s concern that the rebound from the worst recession since the 1930s has been too slow to develop. Economists surveyed by Bloomberg project unemployment will average at least 9 percent through 2011.
The U.S. has “a difficult labor market and mediocre GDP growth,” said Ryan Sweet, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania. “Not enough jobs will have been created to keep the unemployment rate from drifting higher.”
A reading as projected means the jobless rate would have equaled or exceed 9.5 percent for 14 consecutive months, surpassing the 13-month period from mid 1982 to mid 1983 as the longest span of elevated joblessness since monthly records began in 1948.
The forecast gain in payrolls excluding government agencies would follow an increase of 67,000 in August. Companies had created an average of 200,000 a month in March and April before growth weakened. The world’s largest economy grew at a 1.7 percent annual pace in the second quarter compared with 3.7 percent in the first three months of the year and 5 percent at the end of 2009, according to Commerce Department data.
Some companies are adding workers for the upcoming holiday season. Toys ‘R’ Us Inc., the world’s biggest toy retailer, plans to hire about 45,000 employees to cope with demand during the holiday season. The move is “essentially doubling” the domestic workforce, Wayne, New Jersey-based Toys ‘R’ Us said in a Sept. 28 statement.
The employment report will be the last before voters go to the polls in midterm elections that will determine which party controls Congress. Cooling growth and a sluggish labor market may feed voter discontent. Polls show the public is increasingly skeptical of President Barack Obama’s performance.
Support for Obama has fallen as the unemployment rate has been slow to retreat. His job approval over a three-day period that ended Sept. 30 was 46 percent, compared with 52 percent at the same time last year, according to a poll from Princeton, New Jersey-based Gallup Inc.
The Labor Department on Oct. 8 will also publish its preliminary estimate for the annual benchmark payroll revisions to be issued in February. The projected changes, which will cover the period from April 2009 to March 2010, are based on state unemployment insurance tax data that cover almost all employers and update the original figures derived from a sampling of about 400,000 worksites.
A report on Oct. 5 from the Tempe, Arizona-based Institute for Supply Management will show that growth at services industries, which cover almost 90 percent of the economy, picked up in September after cooling the prior month, according to the Bloomberg survey. The group’s index increased to 52 from 51.5 in August, the weakest reading in seven months, economists said. Readings above 50 signal growth.
Manufacturing, which last year led the U.S. out of its worst recession since the 1930s, is showing signs of slowing. Orders placed with U.S. factories dropped 0.4 percent in August, the third decline in four months, according to the median estimate of economists ahead of tomorrow’s Commerce Department report.
An ISM report last week showed manufacturing expanded in September at the slowest pace in 10 months.
Data from the National Association of Realtors tomorrow may show pending home sales, or the number of contracts to purchase previously owned houses, rose in August for a second consecutive month, according to the survey median. Housing demand is hovering near record lows after the expiration of a homebuyer tax credit, even with cheaper prices and lower borrowing costs.
Bloomberg Survey ============================================================== Release Period Prior Median Indicator Date Value Forecast ============================================================== Factory Orders MOM% 10/4 Aug. 0.1% -0.4% Pending Homes MOM% 10/4 Aug. 5.2% 2.8% ISM NonManu Index 10/5 Sept. 51.5 52.0 Initial Claims ,000’s 10/7 25-Sep 453 450 Nonfarm Payrolls ,000’s 10/8 Sept. -54 0 Private Payrolls ,000’s 10/8 Sept. 67 77 Manu Payrolls ,000’s 10/8 Sept. -27 2 Unemploy Rate % 10/8 Sept. 9.6% 9.7% Hourly Earnings MOM% 10/8 Sept. 0.3% 0.2% Avg Weekly Hours 10/8 Sept. 34.2 34.2 ==============================================================