A projected gain in US payrolls in September was probably too small to bring down the unemployment rate as concern mounted that the global recovery was losing momentum, economists said before a report on Friday.
Employment climbed by 55,000 workers after no change in August, according to the median forecast of 91 economists surveyed by Bloomberg News. The jobless rate was 9.1 per cent for a third consecutive month, according to the forecasts.
The debt crisis in Europe, political gridlock in the US and plunging stock prices have led to a drop in consumer and business confidence that may keep hurting spending and hiring. The risk that the world’s largest economy may fall back into a recession has prompted the Federal Reserve and President Barack Obama to announce further measures to sustain the expansion.
“Businesses remain reluctant to add workers,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc in West Chester, Pennsylvania. “Much of the weakness in hiring can be blamed on uncertainty.”
Unemployment has exceeded eight per cent since February 2009, the longest stretch of such elevated joblessness since monthly records began in 1948.
Private payrolls, which exclude government jobs, rose 90,000 after a gain of 17,000 in the prior month, economists forecast the employment report will also show.
While a labour dispute at Verizon Communications Inc depressed employment in August, its resolution may have added about 45,000 workers back to payrolls last month, according to John Herrmann, senior fixed-income strategist at State Street Global Markets LLC in Boston.
Conversely, the return of state government workers in Minnesota lifted the August payroll count by 23,000, a boost that wasn’t repeated last month.
The economy expanded at a 1.3 per cent pace in the second quarter following a 0.4 per cent gain in the first three months of 2011, the weakest performance in two years, the Commerce Department reported last week. Consumer spending grew 0.7 per cent, the least since the last three months of 2009.
Jan Hatzius, chief economist at Goldman Sachs Group Inc in New York, says the odds of a renewed US recession are rising as confidence and spending have slumped. This week he said he saw a 40 per cent chance the US would slip back into a recession over the next year.
Julia Coronado, chief economist for North America at BNP Paribas in New York, forecasts a “mild recession.”
The projected gain in total payrolls would bring the average from July through September to 47,000, down from 97,000 in the second quarter and 166,000 in the first three months of the year.
200,000 A MONTH
Sustained increases of around 200,000 a month are needed to bring unemployment down about a percentage point over a year, according to Eric Green, chief market economist at TD Securities Inc in New York.
Through August, the economy had recovered about 1.9 million of the 8.75 million jobs lost as a result of the 18-month recession that ended in June 2009.
“Economic growth remains slow,” Fed policymakers said September 21 as they announced a plan to bring down longer-term lending rates. While officials said they “expect some pickup in the pace of recovery over coming quarters,” they anticipate “the unemployment rate will decline only gradually.”
Obama last month proposed a $447 billion jobs plan that economists surveyed by Bloomberg forecast would help avoid a return to recession by maintaining growth and pushing down the unemployment rate next year.
STOCK MARKET
The Standard & Poor’s 500 Index had its biggest quarterly drop from July through September since 2008 on concern the recovery will falter. It’s climbed six per cent so far this week. Futures expiring in December fell 0.2 per cent from yesterday to 1,155.2 as of 10.33 am in London.
Citigroup Inc, the third-biggest US bank, is among firms that have turned more cautious about hiring. It said last month it will limit hiring to only “critical” jobs as the economic slowdown continues and revenue slumps.
“We are currently only filling positions we believe are critical to the line of business or function,” Shannon Bell, a spokeswoman for the New York-based bank, said in an interview September 15.
Nonetheless, some companies are planning to boost payrolls. Ford Motor Co this week said it has committed to add 12,000 hourly jobs in its US manufacturing plants by 2015 as part of an agreement with the United Auto Workers.
Ford said it will be “in-sourcing” jobs from Mexico, China and Japan. Ford said this will be 5,750 hourly jobs more than a previously announced 7,000 positions to be added by the end of 2012.
