By Shobhana Chandra
Oct. 3 (Bloomberg) -- The U.S. probably lost jobs in September for a ninth month as the credit crisis deepened the economic slump, economists said before a government report today.
Payrolls fell by 105,000 last month, the biggest decline in five years, according to the median estimate of economists surveyed by Bloomberg News. The Labor Department report, the last before the presidential election, may also show the unemployment rate was unchanged at a five-year high of 6.1 percent.
The world's largest economy may be headed for bigger job losses as the worst financial meltdown since the Great Depression causes consumers and companies to retrench. A sinking labor market and rising borrowing costs raise the odds Federal Reserve policy makers will cut interest rates by the Oct. 28-29 meeting.
``The domestic economy is in a recession, and things deteriorated during the month,'' said Jonathan Basile, an economist at Credit Suisse Holdings Inc. in New York. ``A bad jobs number would solidify the market's expectations of a Fed rate cut sooner than the meeting.''
The payroll report is due at 8:30 a.m. in Washington. Estimates in the Bloomberg survey of 76 economists ranged from declines of 156,000 to 60,000. The job count dropped by 84,000 in August. Forecasts for the unemployment rate ranged from 6 percent to 6.3 percent.
The misery index, which adds the unemployment and inflation rates, surged to 11.7 percent in August, the highest level since 1991.
Past Elections
At 6.1 percent, the jobless rate would be up 1.4 percentage points from September 2007. Since World War II, the rate has only risen twice during similar periods before presidential elections. In both cases -- when Bill Clinton defeated George H. W. Bush in 1992 and when Ronald Reagan beat Jimmy Carter in 1980 -- the incumbent party lost the election.
The October employment report is scheduled for publication three days after Americans go to the polls on Nov. 4.
``Voters are extremely angry, and they want someone to blame,'' said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis.
Democratic presidential nominee Barack Obama has opened up a lead over Republican rival John McCain in the aftermath of their first debate and amid growing concerns about the economy, according to a Pew Research Center survey taken Sept. 27-29. A mid-September poll from Washington-based Pew had shown the candidates in a statistical dead heat.
Obama, Polls
Earlier in September, a Bloomberg/Los Angeles Times poll showed more respondents said Obama would do a better job handling the financial crisis than McCain, and almost half of the voters believed he had better ideas to strengthen the economy than his rival.
In the past month, Hewlett-Packard Co., the world's largest personal-computer maker, announced it will cut 24,600 jobs, and auto-parts maker Federal-Mogul Corp. said it would eliminate 4,000 positions globally.
The Senate passed a $700 billion rescue package for the financial industry earlier this week and the House of Representatives may vote on it today.
Marriott International Inc., the world's largest hotel chain, yesterday reported third-quarter profit fell 28 percent as U.S. companies and consumers cut back on travel.
``Without action, the resulting credit squeeze could threaten businesses,'' Chief Financial Officer Arne Sorenson said on a conference call. There are ``tens of thousands of jobs at stake in our company alone, and we are typical.''
Spending Forecast
Mounting job cuts will further limit consumer spending, which accounts for more than two-thirds of the economy. A Bloomberg survey in September predicted spending will be unchanged this quarter, the weakest performance since 1991.
New research from the Fed Bank of New York showed the jobs report is one of only two data releases that have a significant effect on the price of bonds, stocks, or currencies.
Fed economists looked at minute-by-minute trading after the release of 13 economic indicators from January 1998 to July 2007. Only the employment and Institute for Supply Management's manufacturing reports regularly moved markets more than random chance and for a lengthy period during the trading day.
``With jobs, the effects are large and persist through the end of the day,'' said economist Linda Goldberg, one of the researchers and a vice president in the New York Fed's international research department.
Manufacturing Contracts
An ISM index on Oct. 1 showed manufacturing shrank in September at the fastest pace since the last recession in 2001. The odds the central bank will lower its benchmark rate by a half percentage point, to 1.5 percent, later this month rose to 34 percent that day, compared with no chance a week earlier, according to futures trading.
The probability jumped to over 90 percent yesterday as stocks tumbled and borrowing costs surged.
The Labor Department today will also publish its preliminary estimate for the annual benchmark revisions to payrolls.
Currently, government data show 521,000 jobs were created during the 12 months that ended in March 2008. That figure may be cut almost in half, economists at Goldman Sachs Group Inc. in New York estimated. The final revision will be issued in February.
Bloomberg Survey
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Nonfarm Unemploy Manu Hourly
Payrolls Rate Payrolls Earnings
,000's % ,000's MOM%
================================================================
Date of Release 10/03 10/03 10/03 10/03
Observation Period Sept. Sept. Sept. Sept.
----------------------------------------------------------------
Median -105 6.1% -57 0.3%
Average -109 6.1% -54 0.3%
High Forecast -60 6.3% -30 0.4%
Low Forecast -156 6.0% -70 0.1%
Number of Participants 76 74 17 55
Previous -84 6.1% -61 0.4%
----------------------------------------------------------------
4CAST Ltd. -60 6.1% --- 0.3%
Action Economics -100 6.2% -70 0.3%
Aletti Gestielle SGR -100 6.1% -45 ---
Allianz Dresdner Economic -85 6.1% --- 0.3%
Argus Research Corp. -75 6.0% --- ---
Banc of America Securitie -100 6.1% --- 0.3%
Bank of Tokyo- Mitsubishi -96 6.1% --- 0.3%
Bantleon Bank AG -110 6.1% --- ---
Barclays Capital -110 6.1% --- 0.3%
BBVA -90 6.2% --- 0.3%
BMO Capital Markets -100 6.1% --- 0.3%
BNP Paribas -100 6.2% --- 0.3%
Briefing.com -90 6.1% --- 0.3%
Calyon -80 6.1% --- 0.3%
CIBC World Markets -120 6.0% --- 0.3%
Commerzbank AG -90 6.2% --- 0.3%
Credit Suisse -100 6.1% --- 0.2%
Daiwa Securities America -100 6.1% --- ---
Danske Bank -90 6.1% --- ---
DekaBank -110 6.1% --- 0.2%
Desjardins Group -105 6.1% --- 0.3%
Deutsche Bank Securities -150 6.1% --- 0.3%
Dresdner Kleinwort -130 6.0% -50 0.3%
DZ Bank -100 6.1% --- ---
First Trust Advisors -80 6.0% -60 0.3%
Fortis -75 6.0% --- ---
FTN Financial -110 6.2% --- ---
Global Insight Inc. -110 6.1% --- 0.3%
Goldman, Sachs & Co. -150 6.2% --- 0.3%
H&R Block Financial Advis -100 6.2% -60 0.3%
Helaba -110 6.1% --- 0.3%
High Frequency Economics -100 6.1% --- 0.3%
HSBC Markets -150 6.2% --- 0.3%
IDEAglobal -100 6.1% -60 0.3%
Informa Global Markets -115 6.1% -60 0.2%
ING Financial Markets -150 6.2% --- 0.3%
Insight Economics -110 6.0% --- 0.2%
Intesa-SanPaulo -100 6.1% --- 0.3%
J.P. Morgan Chase -105 6.2% --- 0.3%
Janney Montgomery Scott L -118 6.3% --- ---
JPMorgan Private Client -125 6.1% -30 0.3%
Landesbank Berlin -120 6.2% --- 0.1%
Landesbank BW -120 6.1% --- ---
Lehman Brothers -125 6.1% --- 0.3%
Lloyds TSB -90 6.0% --- 0.4%
Maria Fiorini Ramirez Inc -105 6.1% --- 0.3%
Merk Investments -105 6.2% -50 0.3%
Merrill Lynch -100 6.2% --- 0.2%
MFC Global Investment Man -120 6.2% -65 0.2%
Moody's Economy.com -125 6.0% -50 0.3%
Morgan Keegan & Co. -113 6.1% --- ---
Morgan Stanley & Co. -150 6.0% --- 0.3%
National City Corporation -156 6.1% --- 0.2%
Natixis -115 6.1% --- 0.3%
Newedge -105 6.1% -60 ---
Nomura Securities Intl. -130 6.1% -60 0.3%
Okasan Securities -120 6.2% --- ---
PNC Bank -100 6.1% -50 0.3%
RBS Greenwich Capital -125 6.1% --- 0.3%
Ried, Thunberg & Co. -100 6.1% --- ---
Schneider Trading Associa -118 6.1% -57 0.2%
Scotia Capital -150 6.3% --- 0.3%
Societe Generale -110 6.1% --- ---
Standard Chartered -100 6.1% --- ---
Stone & McCarthy Research -105 6.1% -40 0.3%
TD Securities -100 --- --- ---
Thomson Financial/IFR -90 6.2% --- 0.3%
Tullett Prebon -130 --- --- 0.3%
UBS Securities LLC -100 6.0% --- 0.3%
Unicredit MIB -85 6.1% --- ---
University of Maryland -80 6.1% -50 0.3%
Wachovia Corp. -150 6.0% --- ---
Wells Fargo & Co. -100 6.2% --- ---
WestLB AG -90 6.1% --- 0.3%
Westpac Banking Co. -125 6.0% --- ---
Wrightson Associates -100 6.1% --- 0.3%
================================================================
To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
Friday, October 3, 2008
U.S. Economy Probably Lost Jobs in September for Ninth Month
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