The U.S. probably lost jobs in September for the ninth consecutive month and manufacturing shrank as the credit crisis intensified, economists said before reports this week.
Payrolls probably fell by 105,000, according to the median estimate in a Bloomberg News survey ahead of the release of Labor Department figures Friday. A report from a private group may show factories stagnated this month as demand softened.
The worst financial-markets meltdown since the Great Depression is dealing another blow to an economy reeling from mounting job losses, a housing slump in its third year and a pullback in consumer spending. Weakening growth overseas will limit demand for U.S.-made goods, further hurting manufacturing.
“Things are definitely looking worse,” said David Resler, chief economist at Nomura Securities International Inc. in New York. The credit crisis “will magnify the degree of the economic downturn. The labor market is weak, and manufacturing is going to slow as some of our trading partners are in a recession like the U.S.”
The employment report may show the jobless rate stayed at a five-year high of 6.1% this month, according to the Bloomberg survey. Factory payrolls probably fell by 50,000.
The Institute for Supply Management’s factory index probably slid to 49.5, from 49.9 in August, the survey median shows. The index for service industries, which make up almost 90% of the economy, declined to 50 from 50.6 the prior month, economists forecast.
An index reading of 50 is the dividing line between expansion and contraction for the Tempe, Ariz., group’s manufacturing report, due Wednesday, and for its services report, due two days later.
Companies will get less support from overseas demand in the coming months. Europe’s economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, and Japan’s economy shrank in the same period.
U.S. businesses also are limiting spending on new equipment. Factory orders fell in August for the first time in six months, economists in the Bloomberg survey predict ahead of Commerce Department figures due Thursday.
Another Commerce report today may show automakers’ incentives helped to lift personal spending by 0.2% in August, according to the median forecast of economists. Still, Americans remain under pressure, and consumer spending may stagnate this quarter, the worst performance since 1991, according to a Bloomberg survey in early September.
The weakening labor market is holding down spending. The projected drop in September payrolls would follow 84,000 reductions in August that brought the total job cuts for the first eight months to 605,000. Last year, the economy generated 91,000 jobs a month on average.
In the last week, Chrysler said it will fire about 250 employees as part of a plan to eliminate 1,000 salaried positions by Tuesday, and UAL Corp.'s United Airlines said 1,550 flight attendants volunteered for leaves, eliminating the need for forced layoffs.
The U.S. Postal Service, which has said it may lose $2 billion this year, announced Tuesday that it was imposing a hiring and promotion freeze, effective immediately.
Payroll declines in September may be bigger in part because Hurricanes Gustav and Ike threw thousands out of work, economists said. More layoffs may occur after a bankruptcy filing by New York investment bank Lehman Bros. Holdings Inc. and the government takeover of Fannie Mae and Freddie Mac.
The New York metropolitan area is forecast to lose 64,000 positions by the second quarter of 2010, according to Moody’s Economy.com.
“I believe that if the credit markets are not functioning, that jobs will be lost, the unemployment rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover,” Federal Reserve Chairman Ben S. Bernanke told the Senate Banking Committee on Tuesday.
(BEGIN TEXT OF INFOBOX)
At a glance
Commerce Department releases personal incomes for August.
Weekly Treasury auction.
Quarterly earnings reports are due from Circuit City Stores and Walgreen.
The Conference Board releases the consumer confidence index.
Standard & Poor’s/Case-Shiller home price index for July is released.
Commerce Department releases construction spending for August.
Major automakers report U.S. auto sales.
Labor Department reports weekly jobless claims.
Commerce Department releases factory orders for August.
Freddie Mac reports weekly mortgage rates.
Quarterly earnings reports are due from Constellation Brands and Marriott International.
Labor Department releases unemployment data for September.
Source: The Associated Press
Los Angeles Times