Job Losses, Manufacturing Probably Eased: U.S. Economy Preview

Job Losses, Manufacturing Probably Eased: U.S. Economy Preview


Nov. 29 (Bloomberg) -- Employers in the U.S. probably cut fewer jobs in November while manufacturing grew at a slower pace, indicating the labor market will take time to mend as the recovery unfolds, economists said before reports this week.

Payrolls fell by 120,000 workers this month, the smallest drop in almost two years, according to the median of 67 analysts surveyed by Bloomberg News ahead of a Dec. 4 Labor Department report. The unemployment rate probably held at 10.2 percent, a 26-year high.

“The economy is recovering, but at a distinctly subpar pace,” Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York, said in a note to clients. “Growth looks too sluggish to lower the 10 percent-plus unemployment rate to a meaningful degree anytime soon.”

Policy makers, with an eye toward congressional elections next year, are likely to zero in on the plight of American workers. President Barack Obama will convene a “jobs summit” at the White House the day before the employment report, and senators will grill Ben S. Bernanke during his nomination hearing to a second term as chairman of the Federal Reserve.

The projected decrease in payrolls would be the smallest since January 2008, the month after the recession began. The world’s largest economy has lost 7.3 million jobs since the start of the contraction, the biggest drop in the post-World War II era.

The jobless rate is projected to exceed 10 percent through the first half of next year, according to the median forecast of economists surveyed this month.

Jobs Summit

Obama will meet with business and labor leaders on Dec. 3 to discuss ways to revive the economy and spur employment.

The president’s approval rating this month fell below 50 percent for the first time in polling by Quinnipiac University on growing discontent over jobs and the war in Afghanistan. The percentage of people who approve of Obama’s handling of the economy fell to 43 percent, according to results issued Nov. 18, down from 47 percent in an October poll.

Bernanke is slated to appear before the Senate Banking Committee, whose chairman, Connecticut Democrat Christopher Dodd, has said the Fed’s lax supervision contributed to the housing bubble. The bust that followed deepened the worst recession since the Great Depression.

The economy grew at a 2.8 percent annual pace from July through September, slower than initially estimated, according to Commerce Department figures released last week. The gain was the first in more than a year.

‘Slow Recovery’

“We are going to have growth hopefully, but it’s going to be a slow recovery,” Kenneth Chenault, chief executive officer of American Express Co., said in a Washington interview with Bloomberg Television that aired Nov. 20. “There can be a far more concerted effort on the part of the private sector and the government sector to work together to create jobs.”

Chenault in the past year announced the elimination of about 11,000 jobs, or 17 percent of the workforce. Defaults at American Express fell to 7.8 percent in October, the sixth straight monthly decline.

The company is now engaged in “selective” hiring, he said. Still, “it dose not mean that we can go back necessarily to the hiring rates we had pre-downturn.”

Manufacturing, which accounts for about 12 percent of the economy, has been a driver of the recovery.

The Tempe, Arizona-based Institute for Supply Management may report Dec. 1 that its factory index fell to 54.8 in November from a three-year high of 55.7 the previous month, the survey median showed. The gauge has surpassed the breakeven level of 50 since August.

Less Production

The figures would confirm earlier reports that showed the rebound in manufacturing was slowing. Factory production fell in October for the first time in four months, and orders for durable goods unexpectedly dropped, data from the Fed and the Commerce Department have shown.

A report from the Commerce Department on Dec. 4 may show factory bookings were unchanged in October after jumping 0.9 percent the previous month, according to the survey median.

Another report from the supply managers may show the broader economy is picking up. The group’s gauge covering non- manufacturing companies, due Dec. 3, probably rose to 51.5, the highest level in more than a year, according to the survey median.

Dubai Jitters

Stocks ended on a sour note last week, with the Standard & Poor’s 500 Index falling 1.7 percent Nov. 26 on concern over Dubai’s attempt to delay debt repayments. The index is up 61.3 percent since sinking to a 12-year low on March 9 as the economy showed signs of recovering.

Like manufacturing, reports on housing this week may show the industry has reached a plateau. The National Association of Realtors on Dec. 1 may report that pending sales of existing homes fell 1 percent in October after jumping more than 6 percent in each of the previous two months, according to the survey median.

Spending on construction projects, due from the Commerce Department the same day, may have dropped 0.5 percent last month after rising 0.8 percent in September, the survey showed.



Bloomberg Survey

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Release Period Prior Median
Indicator Date Value Forecast
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ISM Manu Index 12/1 Nov. 55.7 54.8
ISM Prices Index 12/1 Nov. 65.0 65.0
Construct Spending MOM% 12/1 Oct. 0.8% -0.5%
Pending Homes MOM% 12/1 Oct. 6.1% -1.0%
Vehicle Sales Mlns 12/1 Nov. 10.5 10.5
Domestic Vehicles Mlns 12/1 Nov. 7.9 7.8
Productivity QOQ% 12/3 3Q 9.5% 8.5%
Labor Costs QOQ% 12/3 3Q F -5.2% -4.2%
Initial Claims ,000’s 12/3 28-Nov 466 480
Cont. Claims ,000’s 12/3 21-Nov 5423 5400
ISM NonManu Index 12/3 Nov. 50.6 51.5
Nonfarm Payrolls ,000’s 12/4 Nov. -190 -120
Unemploy Rate % 12/4 Nov. 10.2% 10.2%
Manu Payrolls ,000’s 12/4 Nov. -61 -50
Hourly Earnings MOM% 12/4 Nov. 0.3% 0.2%
Hourly Earnings YOY% 12/4 Nov. 2.4% 2.3%
Avg Weekly Hours 12/4 Nov. 33.0 33.1
Factory Orders MOM% 12/4 Oct. 0.9% 0.0%
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