U.S. Economy Probably Lost Jobs for Seventh Consecutive Month

By Shobhana Chandra

Aug. 1 (Bloomberg) -- The U.S. probably lost jobs in July for a seventh consecutive month and the unemployment rate rose, increasing the risk the economic slowdown will worsen, economists said before a government report today.

Payrolls fell by 75,000 after a 62,000 decline in June, according to the median estimate of 80 economists surveyed by Bloomberg News. The jobless rate probably rose to 5.6 percent, the highest level in four years, according to the survey median.

Fewer jobs, combined with decreasing property values, stricter lending rules and near-record energy prices, would further undermine the ability of Americans to spend. Cutbacks at UAL Corp. and Starbucks Corp. signal firings are spreading beyond builders and manufacturers as the cost of raw materials soars.

``We'll see accelerated declines in payrolls,'' said Lindsey Piegza, an economic analyst at FTN Financial in New York. ``That will really compound the pressure on the consumer.''

The Labor Department's employment report is due at 8:30 a.m. in Washington. Payroll estimates in the Bloomberg survey ranged from a decline of 150,000 to no change. The jobless rate is forecast to rise from 5.5 percent in June.

A private report today may show manufacturing shrank in July for the sixth time in eight months. The Institute for Supply Management's factory index fell to 49 from 50.2 in June, according to the Bloomberg survey median. A reading of 50 divides growth from contraction.

The payrolls report is projected to show a 40,000 decline in factory jobs.

Recession Signal

The employment figures may reinforce concern that the economy is in a recession. The July cuts would bring the total drop in payrolls so far this year to more than half a million.

The National Bureau of Economic Research, the official arbiter of U.S. contractions, tracks payrolls, sales, incomes, production and gross domestic product in making the recession call. The group defines downturns as a ``significant'' decrease in activity over a sustained period of time, and usually takes six to 18 months to make a determination.

The economy shrank at the end of 2007 and grew less than forecast in this year's second quarter, figures from the Commerce Department showed yesterday. Some economists said this indicated the U.S. slipped into a recession late last year. Investors pared bets the Federal Reserve will raise interest rates this year.

More Americans filed initial claims for unemployment benefits last week than at any time in more than five years, Labor reported yesterday. Consumer confidence surveys have indicated that Americans, growing more pessimistic about job prospects, may trim spending.

More Firings

Starbucks, the world's largest chain of coffee shops, this week said it'll cut another 1,000 jobs as sales slump. The Seattle-based company on July 1 announced plans to eliminate as many as 12,000 positions worldwide.

Automakers and airlines continue to shed jobs. General Motors Corp. may cut about 5,000 U.S. jobs by year-end, people familiar with the plan said this week. July announcements at carriers included 7,000 cuts at UAL's United Airlines, and 6,840 at American Airlines parent AMR Corp.

Sealed Air Corp., the maker of Bubble Wrap packaging, said this week it plans to eliminate 900 to 1,000 jobs globally after second-quarter profit fell because of rising costs to make plastics.

``We certainly are facing a challenging environment in 2008,'' Chief Financial Officer David Kelsey said in a July 30 telephone interview.

Bloomberg Survey

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Nonfarm Unemploy Manu ISM
Payrolls Rate Payrolls Manu
,000's % ,000's Index
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Date of Release 08/01 08/01 08/01 08/01
Observation Period July July July July
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Median -75 5.6% -40 49.0
Average -72 5.6% -39 49.3
High Forecast 0 5.8% -30 52.5
Low Forecast -150 5.3% -51 47.8
Number of Participants 80 78 21 75
Previous -62 5.5% -33 50.2
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4CAST Ltd. -85 5.6% --- ---
Action Economics -60 5.5% -35 50.0
AIG Investments -45 5.5% --- 49.0
Aletti Gestielle SGR -68 5.6% -40 49.0
Argus Research Corp. -55 5.3% -35 52.5
Banc of America Securitie -60 5.5% --- 49.0
Bancolombia SA -88 --- --- ---
Bank of Tokyo- Mitsubishi -79 5.7% --- 51.2
Barclays Capital -60 5.5% --- 50.5
BBVA -75 5.6% --- 51.5
BMO Capital Markets -75 5.6% --- 49.2
BNP Paribas -95 5.6% --- 48.0
Briefing.com -40 5.5% --- 50.5
Calyon -55 5.6% --- 49.0
CFC Group -60 5.5% -33 49.0
CIBC World Markets -75 5.6% --- 48.0
Citi -75 5.5% --- 49.0
Commerzbank AG -75 5.6% --- 49.0
Credit Suisse -75 5.5% --- 49.0
Daiwa Securities America -60 5.6% --- 50.0
Danske Bank -75 5.6% --- 48.5
DekaBank -50 5.5% --- 49.5
Deutsche Bank Securities -85 5.5% --- 49.0
Deutsche Postbank AG -65 5.6% --- 49.5
Dresdner Kleinwort -135 5.6% -45 49.5
DZ Bank -75 5.5% --- 49.6
First Trust Advisors 0 5.7% -50 49.1
Fortis -57 5.5% --- 50.0
FTN Financial -100 5.4% --- 49.5
GCI Capital -61 5.5% --- ---
Global Insight Inc. -45 5.5% --- 48.7
Goldman, Sachs & Co. -50 5.6% --- 49.5
H&R Block Financial Advis -70 5.6% -30 49.5
Helaba -75 5.6% --- 49.0
High Frequency Economics -100 5.5% --- 50.2
Horizon Investments -40 5.5% --- 49.0
HSBC Markets -100 5.6% --- 48.0
IDEAglobal -80 5.5% -40 49.0
Informa Global Markets -95 5.6% -45 50.0
ING Financial Markets -150 5.6% -40 49.7
Insight Economics -65 5.6% --- 49.0
Intesa-SanPaulo -85 5.6% --- 49.0
J.P. Morgan Chase -70 5.6% --- 49.5
Janney Montgomery Scott L -80 5.6% --- 47.9
JPMorgan Private Client -80 5.6% -30 49.9
Landesbank Berlin -75 5.4% --- 48.5
Landesbank BW -95 5.6% --- 48.3
Lehman Brothers -75 5.6% --- 49.5
Lloyds TSB -70 5.5% -40 50.4
Maria Fiorini Ramirez Inc -85 5.6% --- 49.0
Merk Investments -93 5.6% -35 49.2
Merrill Lynch -70 5.6% --- 49.0
MFC Global Investment Man -55 5.6% -40 48.9
Moody's Economy.com -80 5.6% -40 49.5
Morgan Keegan & Co. -84 5.6% --- ---
Morgan Stanley & Co. -50 5.6% --- 49.0
National Bank Financial -90 5.6% --- 50.0
National City Corporation -24 5.5% --- 48.6
Natixis -80 5.6% --- 48.8
Nomura Securities Intl. -65 5.5% -51 48.6
Nord/LB -75 5.6% -45 48.0
PNC Bank -75 5.6% -35 49.3
RBS Greenwich Capital -50 5.6% --- 49.3
Ried, Thunberg & Co. -90 5.6% --- 49.0
Schneider Trading Associa -87 5.6% -41 49.4
Scotia Capital -85 5.8% --- 49.0
Skandia -40 --- --- ---
Societe Generale -80 5.6% --- 50.0
Standard Chartered -75 5.6% --- 48.5
Stone & McCarthy Research -60 5.5% -30 47.8
TD Securities -60 5.5% --- 49.0
Thomson Financial/IFR -70 5.5% --- 49.4
UBS Securities LLC -75 5.6% --- 48.5
Unicredit MIB -55 5.5% --- 49.6
University of Maryland -60 5.6% -35 50.0
Wachovia Corp. -90 5.5% --- 49.0
Wells Fargo & Co. -60 5.5% --- 50.0
WestLB AG -60 5.6% --- 49.1
Westpac Banking Co. -75 5.6% --- 49.5
Wrightson Associates -90 5.6% --- 49.0
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To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net