Payrolls in the U.S. probably fell in August for an eighth month and manufacturing stalled, signaling that growth faltered, economists said before reports this week.
Employers probably cut 75,000 jobs last month, according to the median estimate in a Bloomberg News survey ahead of a Labor Department report Friday. Results of a private poll due to be released today may show that factory activity stagnated for a second month.
Mounting job losses, sliding home values, reduced access to credit and rising prices have given Americans reason to pull back. Gripped by this vicious circle of firings and spending cuts, the economy may weaken again in coming months.
“The deterioration will be quite noticeable,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “We’ll see job cuts continuing as businesses are under a lot of pressure. The manufacturing sector is getting support from exports but being held back by weak domestic activity.”
The employment report may also show that the jobless rate was unchanged in August at a four-year high of 5.7%, according to the Bloomberg survey median. Factory payrolls probably fell by 35,000.
Soaring costs and slowing sales are pushing carmakers and airlines to cut workers. UAL Corp.'s United Airlines, the world’s second-largest carrier, recently said it would eliminate 1,550 flight attendant jobs.
General Motors Corp., the largest U.S. automaker, is offering early-retirement incentives to about 9,000 U.S. salaried workers, people familiar with the plan said last week. GM Chief Executive Rick Wagoner said in August that he was not yet seeing signs of a recovery in the economy or vehicle sales.
Other industries are also hurting. Marvell Technology Group Ltd., the maker of chips for phones such as the BlackBerry, recently provided sales projections that missed analysts’ estimates for this quarter.
“If you look at the housing situation, the debt situation and gas prices, it adds up to something unfavorable,” Clyde Hosein, chief financial officer of Marvell Technology, which is based in Hamilton, Bermuda, and run from Santa Clara, Calif., said in an interview last week.
The projected drop in payrolls in August would bring the total decline in employment so far this year to more than half a million. The economy created 1.1 million jobs in 2007.
Employment is among the indicators tracked by the National Bureau of Economic Research, the official arbiter of U.S. economic cycles, in making the recession call. The others are sales, incomes, production and gross domestic product.
Declining demand is also prompting manufacturers to cut back. The Institute for Supply Management’s factory index was probably unchanged at 50 in August for a second month, the survey median shows. A reading of 50 is the dividing line between expansion and contraction. The report is due today.
Commerce Department figures also due today may show that spending on construction projects dropped in July for the fifth time in seven months, according to the survey.