BLBG; U.S. Jobless Rate Probably Rose to 16-Year High, Payrolls Fell
Unemployment in the U.S. probably climbed in January to the highest level since 1992 and payrolls dropped for a 13th consecutive month as the recession showed no sign of abating, economists said before a report today.
The jobless rate rose to 7.5 percent, according to the median estimate of 74 economists in a Bloomberg News survey. Employers cut headcounts by 540,000 people, surpassing a half million for a third month.
The loss of jobs, ranging from manufacturers including Caterpillar Inc. to retailers such as Macy’s Inc., is shattering consumer confidence and crippling spending. President Barack Obama is likely to use the first employment report since taking office to prod lawmakers into agreeing on a compromise economic stimulus package by the end of this month.
“Companies will be cutting deeper in the first quarter as employers are focused on survival,” said Christopher Low, chief economist at FTN Financial in New York. “It is no exaggeration when the president says the stimulus has to pass now to avoid disaster. With households struggling, the situation gets worse every month you have outsized cuts in jobs.”
The Labor Department’s report is due at 8:30 a.m. in Washington. Economists’ payroll estimates ranged from declines of 400,000 to 750,000. Unemployment forecasts ranged from 7.3 percent to 7.6 percent.
Payrolls fell by 524,000 in December and 584,000 in November. It would be the first time since records began in 1939 that job cuts exceeded 500,000 in three consecutive months. The economy lost about 2.6 million jobs last year.
Stimulus Plan
The House of Representatives last week passed an $819 billion stimulus package that includes tax cuts and infrastructure spending. The Senate’s plan is closer to $900 billion.
“A failure to act and to act now will turn crisis into catastrophe and guarantee a longer recession,” Obama told lawmakers on Feb. 4 in Washington. The economic slump began in December 2007, already making it the longest since 1982.
Manufacturers probably dismissed 145,000 workers last month, the survey median shows.
Caterpillar, the world’s largest maker of construction equipment, on Jan. 30 said it plans to cut 2,110 workers in addition to the 20,000 reductions it reported earlier in the month.
Other reports this week reinforced the deterioration. ADP Employer Services said companies cut an estimated 522,000 jobs in January. Challenger, Gray & Christmas Inc. reported job-cut announcements more than tripled from January 2008, led by retailers battered by the worst holiday-shopping season in four decades.
Retail Cuts
Saks Inc., Target Corp., Starbucks Corp. and Home Depot Inc. last month reported plans to reduce workers. Others following suit in February include Macy’s. The second-largest U.S. department-store company said it will cut 7,000 jobs, eliminate executives’ merit increases for 2008, and trim its contribution to staff 401(k) retirement-savings plans.
“This is a time when nothing should be considered a sacred cow,” Macy’s Chief Executive Officer Terry Lundgren said on a conference call with investors and analysts.
News of job losses continued this week. PNC Financial Services Group Inc. will reduce almost 10 percent of its workforce by 2011, and Estee Lauder Cos., the maker of Clinique and Bobbi Brown cosmetics, will slash 2,000 jobs over the next two years.
Government jobs are now also in jeopardy. The U.S. Postal Service plans to trim headcount through attrition and early retirement, and has asked lawmakers to allow it to reduce its six-days-a-week delivery schedule to pare expenses.
With today’s report, the Labor Department will also issue revisions to payrolls going back to 2004. The annual benchmark revision, which aligns the data with corporate tax records and covers the period from April 2007 to March 2008, will also be announced. Labor estimated in October that payrolls for the 12 months ended in March 2008 would be reduced by 21,000.
