By Bob Willis
Oct. 2 (Bloomberg) -- The U.S. jobless rate probably rose to a 26-year high in September as employers kept cutting staff, signaling consumers will not lead the recovery, economist said before a report today.
Unemployment likely climbed to 9.8 percent, the highest since 1983, from 9.7 percent in August, according to the median estimate of 81 economists surveyed by Bloomberg News. Payrolls probably fell by 175,000 workers, the smallest drop in 13 months, they survey also showed.
Federal Reserve Chairman Ben S. Bernanke yesterday said the expansion may not be strong enough to “substantially” bring down unemployment, indicating the central bank will be slow to drain the trillions of dollars it’s pumped into the economy. UAL Corp. is among companies still cutting jobs on concern spending will fade as government stimulus wanes.
“The magnitudes of the job losses are going to continue to get smaller, but unfortunately we don’t see very much hiring going on,” said David Resler, chief economist at Nomura Securities International Inc. in New York. “Until that changes, doubts about the sustainability of this rebound in economic activity are going to linger.”
The Labor Department’s report is due at 8:30 a.m. in Washington. Economists’ payroll forecasts ranged from declines of 100,000 to 260,000.
Employment Slump
The September projection would bring total jobs lost since the recession began in December 2007 to 7.2 million, the biggest decline since the Great Depression. Monthly losses reached a six-decade peak of 741,000 in January.
Economists surveyed by Bloomberg last month projected the jobless rate will reach 10 percent by late 2009 and average 9.7 percent for all of next year even as the economy expands at an average 2.6 percent pace in the second half of this year and 2.4 percent in 2010.
Bernanke told lawmakers in Washington yesterday that he anticipated the jobless rate will hold above 9 percent though 2010.
The Standard & Poor’s 500 Index is down 3.9 percent since Sept. 22 as figures on home sales, manufacturing and business spending were weaker than analysts anticipated. The index is still up 52 percent from a 12-year low in March as the economy showed signs of recovering.
While acknowledging that “economic activity has picked up,” Fed policy makers on Sept. 23 said household spending “remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.”
Less Income
Declining pay is one reason economists project consumer spending, which accounts for 70 percent of the economy, will be slow to gain speed. Personal income was down 2.6 percent in August from a year earlier, a Commerce Department report yesterday showed.
General Motors Co. this week said it would close the Saturn brand after Penske Automotive Group Inc. broke off discussions to buy the unit. Saturn dealers will have until October 2010 to wind down operations. The Detroit-based automaker said in June a Saturn sale would have saved 13,000 jobs and 350 dealerships.
GM had called back some workers after the government’s “cash-for-clunkers” plan cut further into inventories that were already diminished during the bankruptcy shutdown.
Sales of cars and light trucks plunged last month after the $3 billion incentive plan expired in late August. Vehicles sold at a 9.2 million annual pace in September, down from a 14.1 million annual pace in August.
Job Cuts
Tenneco Inc., the largest North American maker of shock absorbers, said Sept. 22 it will shut a factory in Cozad, Nebraska, by the end of next year and shift production of the parts to plants in Georgia, Arkansas and Celaya, Mexico.
Airlines are also cutting staff. UAL’s United Airlines, the third-biggest U.S. carrier, last month furloughed 290 more pilots under a plan to trim jobs and limit labor costs, while American Airlines said it would furlough 228 flight attendants.
The Labor Department today will also publish its preliminary estimate for the annual benchmark revisions to payrolls that will be issued in February.
Employers cut 4.8 million jobs in the 12 months through March 2009, the period covered by the revisions. Economists at UBS Securities LLC in Stamford, Connecticut, said income tax records indicate about another 200,000 jobs were lost from March 2008 through December 2008.
Bloomberg Survey
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Nonfarm Unemploy Manu Factory
Payrolls Rate Payrolls Orders
,000’s % ,000’s MOM%
===============================================================
Date of Release 10/02 10/02 10/02 10/02
Observation Period Sept. Sept. Sept. Aug.
---------------------------------------------------------------
Median -175 9.8% -52 0.0%
Average -179 9.8% -53 0.0%
High Forecast -100 9.9% -35 2.1%
Low Forecast -260 9.6% -75 -1.7%
Number of Participants 84 81 24 64
Previous -216 9.7% -63 1.3%
---------------------------------------------------------------
4CAST Ltd. -155 9.7% --- 0.0%
Action Economics -160 9.8% -65 1.7%
AIG Investments -214 9.8% --- -0.7%
Aletti Gestielle SGR -215 9.8% -60 1.0%
Ameriprise Financial Inc -190 9.7% -50 0.8%
Argus Research Corp. -260 9.8% -75 -0.4%
Bancolombia SA -150 9.8% --- ---
Banesto -185 --- --- 1.1%
Bank of Tokyo- Mitsubishi -202 9.9% --- -1.0%
Bantleon Bank AG -160 9.8% --- -0.5%
Barclays Capital -175 9.8% -40 0.0%
Bayerische Landesbank -180 9.8% --- 1.1%
BBVA -190 9.8% -35 1.2%
BMO Capital Markets -170 9.8% --- -0.9%
BNP Paribas -175 9.9% --- 1.0%
BofA Merrill Lynch Resear -150 9.8% --- -0.5%
Briefing.com -225 9.9% --- -1.7%
Calyon -250 9.8% --- -1.1%
Capital Economics -150 9.8% --- -1.5%
CIBC World Markets -220 9.7% --- 0.5%
Citi -175 9.8% --- 0.0%
ClearView Economics -175 9.9% -50 -1.1%
Commerzbank AG -150 9.8% --- 1.0%
Credit Suisse -140 9.8% --- 1.0%
Daiwa Securities America -160 9.8% --- 0.0%
Danske Bank -100 9.8% --- ---
DekaBank -170 9.7% --- 1.0%
Desjardins Group -200 9.8% --- -0.5%
Deutsche Bank Securities -100 9.8% --- -0.5%
Deutsche Postbank AG -200 9.8% --- 0.8%
DZ Bank -170 9.8% --- 1.3%
First Trust Advisors -135 9.6% -55 -0.8%
Fortis -190 9.8% --- ---
FTN Financial -150 9.8% --- 0.4%
GAIN Capital -205 --- --- ---
Goldman, Sachs & Co. -250 9.8% --- -1.0%
Helaba -210 9.8% --- 0.5%
Herrmann Forecasting -136 9.8% -53 -0.6%
High Frequency Economics -180 9.8% --- -1.5%
HSBC Markets -170 9.8% --- ---
Ibersecurities -180 --- --- 0.9%
IDEAglobal -150 9.8% -45 0.8%
IHS Global Insight -175 9.7% --- ---
Informa Global Markets -190 9.8% -50 ---
ING Financial Markets -175 9.9% -50 1.0%
Insight Economics -150 9.9% --- -0.8%
Intesa-SanPaulo -170 9.7% --- ---
J.P. Morgan Chase -140 9.8% -45 -0.1%
Janney Montgomery Scott L -200 9.8% --- 0.6%
Jefferies & Co. -190 9.8% -55 -0.8%
Johnson Illington Advisor -240 9.8% -60 ---
Landesbank Berlin -200 9.9% --- 2.1%
Maria Fiorini Ramirez Inc -215 9.8% --- ---
MFC Global Investment Man -170 9.8% -45 0.5%
Mizuho Securities -225 9.8% --- ---
Moody’s Economy.com -155 9.8% -50 0.3%
Morgan Keegan & Co. -175 9.8% --- -1.1%
Morgan Stanley & Co. -150 9.8% --- -0.4%
National Bank Financial -120 9.8% --- ---
Natixis -180 9.8% --- ---
Newedge -165 9.8% -48 ---
Nomura Securities Intl. -170 9.8% -55 -1.5%
Nord/LB -190 9.8% -45 0.0%
PNC Bank -190 9.8% -60 -0.8%
Prestige Economics -200 9.9% --- ---
Raymond James -150 9.8% --- ---
RBC Capital Markets -190 9.7% --- ---
RBS Securities Inc. -160 9.7% --- -0.6%
Ried, Thunberg & Co. -225 9.9% --- -0.4%
Schneider Foreign Exchang -138 9.9% --- -1.2%
Scotia Capital -200 9.8% --- 0.5%
Standard Chartered -170 9.8% -55 1.1%
Stone & McCarthy Research -185 9.8% -60 1.6%
TD Securities -175 9.7% --- ---
Thomson Reuters/IFR -170 9.8% --- -1.3%
Tullett Prebon -180 9.7% --- 0.2%
UBS -150 9.8% --- -0.3%
UniCredit Research -200 9.8% --- ---
Union Investment -200 9.9% --- ---
University of Maryland -190 9.8% -55 1.2%
Wells Fargo & Co. -205 9.8% --- -1.0%
WestLB AG -180 9.8% --- 1.0%
Westpac Banking Co. -150 9.7% --- 1.5%
Wrightson Associates -225 9.9% --- -0.4%
===============================================================
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
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