Sept. 30 (Bloomberg) — The jobless rate probably rose in September as employers kept a lid on hiring, showing why Federal Reserve policy makers have zeroed in on shoring up the U.S. labour market, economists said before a report this week.
The rate rose to 8.2 per cent from 8.1 per cent in August, according to the median forecast of 62 economists surveyed by Bloomberg before Oct. 5 figures from the labour Department. Payrolls increased by 115,000 in September, less than the 139,000 average over the first eight months of the year, the report may also show.
Persistent joblessness may curb wage gains and limit consumer spending, representing another impediment to an economy facing a slowdown in manufacturing as global demand cools and businesses curtail investments. Fed Chairman Ben S. Bernanke and his colleagues at the central bank pledged this month to keep pumping money into financial markets until employment picks up.
“We’re looking for pretty sluggish payroll growth,” said Peter D’Antonio, an economist at Citigroup Global Markets Inc. in New York. “This will be more of the same, what Bernanke called ‘worrisome.’ It may reflect weakness coming from abroad, weakness in manufacturing, and the gains aren’t being helped by risks from fiscal policy.”
September’s projected payroll increase would follow a 96,000 gain the prior month.
This week’s release marks the next-to-last employment report before the November elections, in which economic issues play a central role.
In the latest Bloomberg National Poll, President Barack Obama leads Republican challenger Mitt Romney among likely voters, 49 per cent to 43 per cent, even as 60 per cent of Americans say the nation is on the wrong track as the president completes his first term. The telephone survey of 1,007 adults, with a margin of error of plus or minus 3.1 percentage points, was conducted Sept. 21-24.
Only one president, Ronald Reagan, has been re-elected since World War II with a jobless rate above 6 per cent. On Election Day 1984, the rate was at 7.2 per cent, having dropped almost three percentage points in the previous 18 months.
Unemployment has exceeded 8 per cent since February 2009, the longest stretch in monthly records dating to back 1948. So far, the economy has recovered about 4.1 million of the 8.8 million jobs lost in the wake of the 18-month recession that ended in June 2009.
To boost growth and stimulate more hiring, the Fed this month said it would hold its target interest rate near zero until at least mid-2015 as it began a third round of stimulus, buying $40 billion in mortgage bonds a month. The S&P 500 rose to 1,465.77 the next day, the highest close since December 2007.
The S&P 500 Index last week had its biggest weekly slump since June amid disappointing economic data, including a plunge in orders for durable goods and stalled consumer spending.
“We’re looking for ongoing, sustained improvement in the labour market,” Chairman Bernanke said in a Sept. 13 press conference following the announcement. “What we’ve seen in the last six months isn’t it.”
Federal Reserve Bank of Chicago President Charles Evans has called for accommodation as long as unemployment exceeds 7 per cent and the inflation outlook remains below 3 per cent. On Sept. 20, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the central bank should hold rates near zero until joblessness drops below 5.5 per cent and inflation doesn’t exceed 2.25 per cent.
Manufacturing, a pillar of the early stages of the recovery, is now waning. The Institute for Supply Management Inc.’s factory index for September was little changed at 49.8 compared with 49.6 the prior month, according to the Bloomberg survey median before the group’s Oct. 1 release. A reading of 50 is the dividing line between expansion and contraction. It would mark the fourth consecutive month without growth.
Manufacturing employment will probably suffer in turn. Siemens AG said it will cut 615 jobs at U.S. factories that produce windmills after a “significant drop in new orders,” according to a message to employees obtained by Bloomberg.
The Tempe, Arizona-based ISM’s services index, which covers almost 90 per cent of the economy and is due on Oct. 3, fell to 53.4 this month from 53.7 in August, according to the survey median.
–With assistance from Chris Middleton in Washington. Editors: Carlos Torres, Vince Golle
To contact the reporter on this story: Alex Kowalski in Washington at [email protected]
To contact the editor responsible for this story: Christopher Wellisz in Washington at [email protected]
Business Insider Emails & Alerts
Site highlights each day to your inbox.