By Shobhana Chandra
Aug. 7 (Bloomberg) -- A slowing in the pace of U.S. job losses last month wasn’t enough to prevent the unemployment rate from climbing to a 26-year high, economists forecast a report today will show.
Employers probably cut 325,000 workers from payrolls in July after trimming 467,000 the prior month, according to the median of 82 estimates in a Bloomberg News survey. The unemployment rate likely rose to 9.6 percent from 9.5 percent.
Companies from Boeing Co. to Verizon Communications Inc. continue to cut costs, signaling that a rebound in hiring will take time to develop even as Obama administration stimulus efforts take hold. A jobless rate that is projected to exceed 10 percent by early 2010, stagnant wages and falling home values mean a lack of consumer spending will curb an economic recovery.
“The labor market is still bad,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “Projects that create jobs will take a long time to ramp up. People are resigned to the idea of a jobless recovery and expectations for the consumer are really low.”
The Labor Department’s report is due at 8:30 a.m. in Washington. Economists’ forecasts for payrolls ranged from declines of 150,000 to 460,000. Job losses peaked at 741,000 in January, the most since 1949.
The July projection would bring total jobs lost since the recession began in December 2007 to 6.8 million, the biggest decline in any post-World War II economic slump.
Unemployment Forecasts
Estimates for the unemployment rate ranged from 9.2 percent to 9.8 percent, according to the survey. A separate Bloomberg survey last month showed unemployment may exceed 10 percent by early next year and average 9.8 percent for all of 2010.
The Standard & Poor’s 500 Index, which reached a 12-year low on March 9, has since climbed 47 percent as evidence mounted the recession was easing.
Declining pay is one reason economists project consumer spending, which accounts for 70 percent of the economy, will be slow to gain speed. Wages and salaries fell 4.7 percent in the 12 months through June, the biggest drop since records began in 1960, according to Commerce Department data issued this week.
Companies like Verizon and Boeing are still looking to trim expenses through cutbacks in staff. New York-based telephone carrier Verizon last month said it plans to slash more than 8,000 jobs in the second half of the year.
10,000 Jobs
Chicago-based Boeing, which is planning to eliminate about 10,000 workers, or 6 percent of its labor force, has agreed to allow some machinists to volunteer for a “layoff with benefits” to help mitigate job cuts, the International Association of Machinists and Aerospace Workers said on July 28.
Emerson Electric Co., a maker of industrial equipment, will cut an additional 5,000 to 6,000 positions in the next few quarters, after it posted its third straight drop in quarterly earnings, the longest stretch since 2002. The St. Louis-based company has already eliminated 20,000 jobs.
“Emerson is still seeing very difficult and challenging times around the world,” Chief Executive Officer David Farr said on a conference call on Aug. 4.
Administration officials including Lawrence Summers, director of the White House National Economic Council, predict most new jobs under President Barack Obama’s stimulus program will come only in 2010. Less than 10 percent of the $787 billion plan goes to job creation this year, and the government still expects to save or create at least 3 million jobs, Summers said in an NBC television interview on Aug. 2.
The unemployment rate may not peak until the second half of 2010, Treasury Secretary Timothy Geithner said on ABC last week, even as the economy shows signs of improvement. Another extension in unemployment benefits “is something that the administration and Congress are going to look very carefully at as we get closer to the end of this year,” Geithner said.
Bloomberg Survey
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Nonfarm Unemploy Manu Hourly
Payrolls Rate Payrolls Earnings
,000’s % ,000’s MOM%
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Date of Release 08/07 08/07 08/07 08/07
Observation Period July July July July
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Median -325 9.6% -100 0.1%
Average -324 9.6% -104 0.1%
High Forecast -150 9.8% -80 0.3%
Low Forecast -460 9.2% -160 0.0%
Number of Participants 82 80 20 60
Previous -467 9.5% -136 0.0%
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4CAST Ltd. -245 9.7% --- 0.1%
Action Economics -320 9.7% -100 0.1%
AIG Investments -375 9.6% --- 0.0%
Aletti Gestielle SGR -370 9.6% -110 ---
Ameriprise Financial Inc -340 9.6% -100 0.1%
Argus Research Corp. -275 9.7% -160 0.3%
Banesto -330 --- --- ---
Bank of Tokyo- Mitsubishi -362 9.2% --- 0.1%
Bantleon Bank AG -310 9.6% --- ---
Barclays Capital -275 9.6% --- 0.0%
BBVA -395 9.7% -133 0.2%
BMO Capital Markets -300 9.7% --- 0.1%
BNP Paribas -350 9.8% --- 0.1%
Briefing.com -370 9.7% --- 0.1%
C I T I C Securities -350 9.6% --- ---
Calyon -340 9.6% --- 0.1%
Capital Economics -380 9.6% --- 0.0%
CIBC World Markets -300 9.6% --- 0.1%
Citi -300 9.7% --- 0.1%
ClearView Economics -300 9.8% -85 0.1%
Commerzbank AG -300 9.6% --- 0.1%
Credit Suisse -275 9.6% --- 0.1%
Daiwa Securities America -375 9.7% --- ---
Danske Bank -313 9.5% --- ---
DekaBank -360 9.6% --- 0.1%
Desjardins Group -350 9.7% --- 0.1%
Deutsche Bank Securities -150 9.6% --- 0.0%
Deutsche Postbank AG -350 9.8% --- ---
DZ Bank -300 9.6% --- ---
First Trust Advisors -250 9.6% -100 0.1%
FTN Financial -300 9.6% --- 0.0%
Goldman, Sachs & Co. -250 9.7% --- 0.2%
Helaba -350 9.6% --- 0.1%
Herrmann Forecasting -321 9.6% -96 0.1%
High Frequency Economics -350 9.7% --- 0.1%
HSBC Markets -375 9.6% --- 0.1%
IDEAglobal -310 9.6% -90 0.1%
IHS Global Insight -330 9.7% --- 0.1%
Informa Global Markets -460 9.7% -85 0.1%
ING Financial Markets -290 9.6% -85 0.1%
Insight Economics -350 9.7% --- 0.0%
Intesa-SanPaulo -350 9.6% --- 0.0%
J.P. Morgan Chase -275 9.7% --- 0.1%
Janney Montgomery Scott L -355 9.6% --- ---
Johnson Illington Advisor -340 9.7% -130 0.2%
JPMorgan’s Private Wealth -375 9.6% --- 0.0%
Landesbank Berlin -320 9.8% --- 0.0%
Landesbank BW -380 9.6% --- ---
Maria Fiorini Ramirez Inc -375 9.6% --- 0.1%
Merrill Lynch/BAS -325 9.7% --- 0.1%
MFC Global Investment Man -330 9.6% -80 0.1%
Mizuho Securities -375 9.7% --- ---
Moody’s Economy.com -305 9.6% -90 0.0%
Morgan Keegan & Co. -296 --- --- ---
Morgan Stanley & Co. -250 9.7% --- 0.1%
National Bank Financial -200 9.5% --- ---
Natixis -310 9.8% --- 0.1%
Newedge -390 9.6% -125 ---
Nomura Securities Intl. -250 9.5% -90 0.1%
Nord/LB -370 9.6% -110 0.1%
PNC Bank -325 9.7% -90 0.0%
Raymond James -280 9.6% --- 0.1%
RBC Capital Markets -315 9.6% --- ---
RBS Securities Inc. -325 9.7% --- ---
Ried, Thunberg & Co. -350 9.6% --- ---
Schneider Foreign Exchang -310 9.6% --- ---
Scotia Capital -400 9.7% --- 0.1%
Societe Generale -285 9.7% --- 0.1%
Standard Chartered -320 9.7% --- 0.0%
Stone & McCarthy Research -375 9.5% -110 0.2%
TD Securities -375 9.7% --- ---
Thomson Reuters/IFR -320 9.8% --- 0.1%
Tullett Prebon -390 9.7% --- 0.1%
UBS Securities LLC -250 9.6% --- 0.1%
UniCredit Research -300 9.7% --- ---
Union Investment -377 9.7% --- 0.1%
University of Maryland -330 9.7% -110 0.1%
Wells Fargo & Co. -245 9.5% --- ---
WestLB AG -350 9.6% --- 0.0%
Westpac Banking Co. -270 9.7% --- ---
Woodley Park Research -247 9.4% --- 0.1%
Wrightson Associates -350 9.6% --- 0.1%
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To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
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