Job losses continue to drag the economy down:
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Joblessness Probably Rose to 25-Year High: U.S. Economy Preview
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By Bob Willis
March 29 (Bloomberg) -- The U.S. jobless rate climbed in March to the highest level since 1983 and manufacturing shrank, putting the recession on the brink of becoming the longest in seven decades, economists said before reports this week.
Unemployment jumped to 8.5 percent from 8.1 percent in February, according to the median estimate of analysts surveyed by Bloomberg News before the Labor Department’s April 3 report. The figures may also show payrolls fell by 660,000 workers, bringing total job losses since the contraction began to 5 million.
Factories are projected to keep cutting staff and output to reduce inventories that piled up after sales sank in the U.S. and abroad. The deteriorating outlook means President Barack Obama’s plan to save or create 3.5 million jobs by boosting government spending and cutting taxes will still leave the country shy of pre-recession employment levels.
“This recession is the deepest and the broadest of the postwar era,” said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. “One thing that happens in recessions is that manufacturing gets clobbered.”
Should it persist into April, the now 16-month recession would surpass similar contractions in the early 1970s and 1980s as the longest since the Great Depression. The magnitude of the current slump is still an open question.
Manufacturing probably contracted in March for the 15th time in the last 16 months, the Tempe, Arizona-based Institute for Supply Management may report on April 1. The group’s factory index was probably at 36 this month compared with February’s 35.8, according to the survey median. Readings less than 50 signal contraction.
Spreading Slump
Weakness in manufacturing has spread from the auto industry, where General Motors Corp. is threatened with possible bankruptcy, to areas such as computers, textiles and chemicals as business spending slumped and the housing recession deepened.
Agilent Technologies Inc., the biggest maker of scientific- testing equipment, will cut 2,700 jobs, more than a tenth of its workforce, to reduce costs after sales fell.
“Business remains severely depressed and there are no prospects for a meaningful recovery in the foreseeable future, Chief Executive Officer Bill Sullivan said in a statement last week from the company’s Santa Clara, California headquarters.
Service industries, which account for almost 90 percent of the economy, probably shrank in March for a sixth straight month, another report from ISM on April 3 is projected to show.
Recent Improvement
The world’s largest economy contracted at a 6.3 percent pace in the fourth quarter, the worst performance since 1982, the government reported last week. Still, recent reports show retail sales, residential construction and home sales have improved, underscoring projections for a return to growth in the second half of the year.
Since taking office Jan. 20, Obama has enacted a series of measures aimed at stemming the recession. He signed into law a $787 billion stimulus plan on Feb. 17 that included spending on infrastructure projects to boost hiring.
The Treasury Department is also moving to repair the damaged financial system and lower record foreclosures, while the Federal Reserve is flooding markets with cash to boost borrowing and spending.
A survey from the New York-based Conference Board on March 31 may show consumer confidence climbed this month from February’s record low as stock prices rebounded. The group began collecting data in 1967.
Factory orders probably rose in February for the first time since July, economists forecast before a Commerce Department report on April 2.
A slump in commercial building may keep depressing construction for much of the rest of the year, even as housing shows signs of stabilizing. Construction spending probably fell in February for a fifth straight month, the Commerce Department may report on April 1, according to economists surveyed.
A report from S&P/Case-Shiller on March 31 may show home values kept falling, economists said.
Bloomberg Survey
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Release Period Prior Median
Indicator Date Value Forecast
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Case Shiller Monthly YO 3/31 Jan. -18.6% -18.6%
Case Shiller Monthly In 3/31 Jan. 150.7 147.2
Consumer Conf Index 3/31 March 25.0 28.0
ADP Payroll ,000’s 4/1 March -697 -663
ISM Manu Index 4/1 March 35.8 36.0
ISM Prices Index 4/1 March 29.0 33.0
Construct Spending MOM% 4/1 Feb. -3.3% -1.8%
Pending Homes MOM% 4/1 Feb. -7.7% 0.1%
Initial Claims ,000’s 4/2 21-Mar 652 650
Cont. Claims ,000’s 4/2 14-Mar 5253 5600
Factory Orders MOM% 4/2 Feb. -1.9% 1.4%
Nonfarm Payrolls ,000’s 4/3 March -651 -660
Unemploy Rate % 4/3 March 8.1% 8.5%
Manu Payrolls ,000’s 4/3 March -168 -160
Hourly Earnings MOM% 4/3 March 0.2% 0.2%
Hourly Earnings YOY% 4/3 March 3.6% 3.5%
Avg Weekly Hours 4/3 March 33.3 33.3
ISM NonManu Index 4/3 March 41.6 42.0
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To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
Last Updated: March 29, 2009 00:01 EDT |
