Economy Still in Low Gear, Reports to Show

The U.S. unemployment rate probably rose to 5.9% in March as the economy remained stuck in low gear, the government is expected to report this week.

Payroll jobs probably fell 38,000, economists expect the Labor Department to report Friday. Unemployment reached an eight-year high of 6% in December.

The economy has lost 343,000 jobs since the end of 2001, when some economists say the recession ended.

The absence of job creation is slowing income growth, curbing consumer spending and weakening manufacturing. An industry report Tuesday is expected to show contraction in the nation’s factories this month as the U.S. went to war in Iraq.

The Institute for Supply Management’s factory index probably fell to 49 in March from 50.5 a month earlier, according to the median of 54 forecasts in a Bloomberg survey.

A reading below 50 signals contraction.

A separate report by the Commerce Department on Wednesday is expected to show a 0.7% decrease in February factory orders.

Service, construction and other nonmanufacturing companies also are slowing. The Institute for Supply Management’s nonfactory index probably fell to 52.5 in March from 53.9 a month earlier, a survey of economists are predicting. The March reading could be the weakest since August.

On Tuesday, the Commerce Department probably will report a 0.8% decrease in February construction spending as inclement weather in the Northeast and Midwest slowed building. In January, construction spending rose 1.7%.

From Bloomberg News