Payrolls Fall More Than Forecast, Unemployment Rises (Update2)
2009-07-02 13:05:01.636 GMT
(Adds economist quote in fourth paragraph.)
By Shobhana Chandra
July 2 (Bloomberg) -- Employers in the U.S. cut 467,000
jobs in June, the unemployment rate rose and hourly earnings
stagnated, offering little evidence the Obama administration’s
stimulus package is shoring up the labor market.
The payroll decline was more than forecast and followed a
322,000 drop in May, according to Labor Department figures
released today in Washington. The jobless rate jumped to 9.5
percent, the highest since August 1983, from 9.4 percent.
Unemployment is projected to keep rising for the rest of
the year just as the income boost from the stimulus package
fades, undermining prospects for a sustained rebound in
household purchases, analysts said. As companies from General
Motors Corp. to Kimberly-Clark Corp. cut costs, the lack of jobs
will restrain any recovery.
“The U.S. economy is going to be shedding jobs right
through into 2010 even after the economy starts growing
modestly,” James Shugg, a senior economist at Westpac Banking
Corp. in London, said in an interview with Bloomberg Television.
Equity-index futures extended losses, with contracts on the
Standard & Poor’s 500 Stock Index falling 1.3 percent to 906.90
at 8:59 a.m. in New York. Treasuries rose, sending yields on
benchmark 10-year notes to 3.514 percent from 3.538 percent late
yesterday.
Jobless Claims
The number of Americans filing claims for unemployment
benefits last week fell in line with forecasts, Labor also said,
indicating firings remain elevated. Initial jobless claims
dropped by 16,000 to 614,000 in the week ended June 27, from a
revised 630,000 the week before.
Revisions added 8,000 to payroll figures previously
reported for May and April.
Payrolls were forecast to drop 365,000 after a 345,000
decrease initially reported for May, according to the median of
79 economists surveyed by Bloomberg News. Estimates ranged from
declines of 150,000 to 500,000. Job losses peaked at 741,000 in
January, the most since 1949.
The jobless rate was projected to climb to 9.6 percent from
9.4 percent. Forecasts ranged from 9.3 percent to 9.7 percent.
By the end of the year, unemployment will reach 10 percent,
according to the median forecast of economists surveyed last
month.
The world’s largest economy has lost about 6.5 million jobs
since the recession began in December 2007. That’s the biggest
drop in any post-World War II economic slump.
Factory Payrolls
Today’s report showed factory payrolls fell by 136,000
after decreasing 156,000 the prior month. Economists forecast a
drop of 150,000. The drop included a decline of 26,500 jobs in
auto manufacturing and parts industries.
More firings are in the works following the bankruptcies of
GM and Chrysler LLC as shutdowns ripple through auto-parts
makers and car dealers.
Payrolls at builders fell 79,000 after decreasing 48,000.
Service industries, which include banks, insurance
companies, restaurants and retailers, subtracted 244,000 workers
after falling 107,000. Retail payrolls decreased by 21,000 after
a 17,600 drop. Financial firms reduced payrolls by 27,000, after
a 30,000 drop the prior month.
Government payrolls decreased by 52,000, the biggest
decline since July 2007, after dropping 10,000 the prior month.
The decrease reflects the layoff of workers hired on a
temporary basis to prepare for the 2010 census. The U.S. Census
Bureau has said it will hire more than 1.4 million people over
the next year to conduct the population count that happens once
every 10 years.
Yellen Comments
Unemployment will “remain painfully high for several more
years,” Federal Reserve Bank of San Francisco President Janet
Yellen said this week. “I expect that we will turn the growth
corner sometime later this year, but I am not optimistic that
the economy will spring back to normal any time soon.”
Tax cuts and Social Security payments under the stimulus
plan propped up incomes last quarter, supporting household
purchases. Consumer spending rose in May as earnings climbed 1.4
percent, the most in a year.
Still, the wealth destruction caused by the housing and
stock-market slumps prompted Americans to rebuild nest eggs. The
savings rate in May surged to a 15-year high.
Household purchases, which account for about 70 percent of
the economy, dropped at a 0.6 percent annual rate last quarter
before growing again in the second half of the year, according
to the median forecast of economists surveyed by Bloomberg in
early June. Purchases rose at a 1.4 percent pace in the first
three months of 2009.
Job Cuts
The auto industry isn’t alone in trimming jobs. Kimberly-
Clark, the maker of Huggies diapers and Kleenex tissues, plans
to cut 1,600 jobs worldwide by year-end. About 800 salaried
employees will leave Deere & Co., the world’s largest maker of
agricultural equipment, under a voluntary program.
“These actions, while difficult, are necessary to help us
emerge from this demanding economic environment,” Kimberly-
Clark’s Chairman and Chief Executive Officer Tom Falk said in a
June 25 statement. The company’s net income has declined for six
straight quarters.
3M Co., the maker of Post-it Notes and Scotch Tape, reduced
positions and offered early retirement to workers, while Dow
Chemical Co., the largest U.S. chemical maker, is cutting jobs
following the acquisition of Rohm & Haas Co.
Government, Services
Service providers and government agencies are also looking
to lower costs. Gannett Co., the largest U.S. newspaper
publisher, yesterday announced it will eliminate about 1,400
jobs by July 9. California Governor Arnold Schwarzenegger said
he’ll force state workers to take a third unpaid day off every
month to conserve cash and will order lawmakers into an
emergency session to tackle the state’s growing budget deficit.
Today’s report also showed the average work week fell to 33
hours, the lowest level since records began in 1964, from 33.1
hours in May. Average weekly hours worked by production workers
rose to 39.5 hours from 39.4 hours, while overtime held at 2.8
hours. That brought the average weekly earnings down to $611.49
from $613.34.
Workers’ average hourly wages held at $18.53 for a second
month. Hourly earnings were 2.7 percent higher than June 2008,
the smallest gain since September 2005. Economists surveyed by
Bloomberg had forecast a 0.1 percent increase from the prior
month and a 2.9 percent gain for the 12-month period.
For Related News and Information:
Stories on the U.S. economy: TNI US ECO <GO>
Bloomberg news on the U.S. labor market: TNI US LABOR BN <GO>
To run a news search on the recession: STNI USRECESSION <GO>
Manufacturing and job cuts: TNI MAC JOBCUTS <GO>
Top news on consumer spending: TOP CONS <GO>
--With assistance from Vivien Lou Chen in San Francisco and
Betty Liu in New York. Editors: Carlos Torres, Christopher
Wellisz
To contact the reporter on this story:
Shobhana Chandra in Washington +1-202-624-1888 or
[email protected]
To contact the editor responsible for this story:
Chris Anstey at +1-202-624-1972 or [email protected]<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p>
2009-07-02 13:05:01.636 GMT
(Adds economist quote in fourth paragraph.)
By Shobhana Chandra
July 2 (Bloomberg) -- Employers in the U.S. cut 467,000
jobs in June, the unemployment rate rose and hourly earnings
stagnated, offering little evidence the Obama administration’s
stimulus package is shoring up the labor market.
The payroll decline was more than forecast and followed a
322,000 drop in May, according to Labor Department figures
released today in Washington. The jobless rate jumped to 9.5
percent, the highest since August 1983, from 9.4 percent.
Unemployment is projected to keep rising for the rest of
the year just as the income boost from the stimulus package
fades, undermining prospects for a sustained rebound in
household purchases, analysts said. As companies from General
Motors Corp. to Kimberly-Clark Corp. cut costs, the lack of jobs
will restrain any recovery.
“The U.S. economy is going to be shedding jobs right
through into 2010 even after the economy starts growing
modestly,” James Shugg, a senior economist at Westpac Banking
Corp. in London, said in an interview with Bloomberg Television.
Equity-index futures extended losses, with contracts on the
Standard & Poor’s 500 Stock Index falling 1.3 percent to 906.90
at 8:59 a.m. in New York. Treasuries rose, sending yields on
benchmark 10-year notes to 3.514 percent from 3.538 percent late
yesterday.
Jobless Claims
The number of Americans filing claims for unemployment
benefits last week fell in line with forecasts, Labor also said,
indicating firings remain elevated. Initial jobless claims
dropped by 16,000 to 614,000 in the week ended June 27, from a
revised 630,000 the week before.
Revisions added 8,000 to payroll figures previously
reported for May and April.
Payrolls were forecast to drop 365,000 after a 345,000
decrease initially reported for May, according to the median of
79 economists surveyed by Bloomberg News. Estimates ranged from
declines of 150,000 to 500,000. Job losses peaked at 741,000 in
January, the most since 1949.
The jobless rate was projected to climb to 9.6 percent from
9.4 percent. Forecasts ranged from 9.3 percent to 9.7 percent.
By the end of the year, unemployment will reach 10 percent,
according to the median forecast of economists surveyed last
month.
The world’s largest economy has lost about 6.5 million jobs
since the recession began in December 2007. That’s the biggest
drop in any post-World War II economic slump.
Factory Payrolls
Today’s report showed factory payrolls fell by 136,000
after decreasing 156,000 the prior month. Economists forecast a
drop of 150,000. The drop included a decline of 26,500 jobs in
auto manufacturing and parts industries.
More firings are in the works following the bankruptcies of
GM and Chrysler LLC as shutdowns ripple through auto-parts
makers and car dealers.
Payrolls at builders fell 79,000 after decreasing 48,000.
Service industries, which include banks, insurance
companies, restaurants and retailers, subtracted 244,000 workers
after falling 107,000. Retail payrolls decreased by 21,000 after
a 17,600 drop. Financial firms reduced payrolls by 27,000, after
a 30,000 drop the prior month.
Government payrolls decreased by 52,000, the biggest
decline since July 2007, after dropping 10,000 the prior month.
The decrease reflects the layoff of workers hired on a
temporary basis to prepare for the 2010 census. The U.S. Census
Bureau has said it will hire more than 1.4 million people over
the next year to conduct the population count that happens once
every 10 years.
Yellen Comments
Unemployment will “remain painfully high for several more
years,” Federal Reserve Bank of San Francisco President Janet
Yellen said this week. “I expect that we will turn the growth
corner sometime later this year, but I am not optimistic that
the economy will spring back to normal any time soon.”
Tax cuts and Social Security payments under the stimulus
plan propped up incomes last quarter, supporting household
purchases. Consumer spending rose in May as earnings climbed 1.4
percent, the most in a year.
Still, the wealth destruction caused by the housing and
stock-market slumps prompted Americans to rebuild nest eggs. The
savings rate in May surged to a 15-year high.
Household purchases, which account for about 70 percent of
the economy, dropped at a 0.6 percent annual rate last quarter
before growing again in the second half of the year, according
to the median forecast of economists surveyed by Bloomberg in
early June. Purchases rose at a 1.4 percent pace in the first
three months of 2009.
Job Cuts
The auto industry isn’t alone in trimming jobs. Kimberly-
Clark, the maker of Huggies diapers and Kleenex tissues, plans
to cut 1,600 jobs worldwide by year-end. About 800 salaried
employees will leave Deere & Co., the world’s largest maker of
agricultural equipment, under a voluntary program.
“These actions, while difficult, are necessary to help us
emerge from this demanding economic environment,” Kimberly-
Clark’s Chairman and Chief Executive Officer Tom Falk said in a
June 25 statement. The company’s net income has declined for six
straight quarters.
3M Co., the maker of Post-it Notes and Scotch Tape, reduced
positions and offered early retirement to workers, while Dow
Chemical Co., the largest U.S. chemical maker, is cutting jobs
following the acquisition of Rohm & Haas Co.
Government, Services
Service providers and government agencies are also looking
to lower costs. Gannett Co., the largest U.S. newspaper
publisher, yesterday announced it will eliminate about 1,400
jobs by July 9. California Governor Arnold Schwarzenegger said
he’ll force state workers to take a third unpaid day off every
month to conserve cash and will order lawmakers into an
emergency session to tackle the state’s growing budget deficit.
Today’s report also showed the average work week fell to 33
hours, the lowest level since records began in 1964, from 33.1
hours in May. Average weekly hours worked by production workers
rose to 39.5 hours from 39.4 hours, while overtime held at 2.8
hours. That brought the average weekly earnings down to $611.49
from $613.34.
Workers’ average hourly wages held at $18.53 for a second
month. Hourly earnings were 2.7 percent higher than June 2008,
the smallest gain since September 2005. Economists surveyed by
Bloomberg had forecast a 0.1 percent increase from the prior
month and a 2.9 percent gain for the 12-month period.
For Related News and Information:
Stories on the U.S. economy: TNI US ECO <GO>
Bloomberg news on the U.S. labor market: TNI US LABOR BN <GO>
To run a news search on the recession: STNI USRECESSION <GO>
Manufacturing and job cuts: TNI MAC JOBCUTS <GO>
Top news on consumer spending: TOP CONS <GO>
--With assistance from Vivien Lou Chen in San Francisco and
Betty Liu in New York. Editors: Carlos Torres, Christopher
Wellisz
To contact the reporter on this story:
Shobhana Chandra in Washington +1-202-624-1888 or
[email protected]
To contact the editor responsible for this story:
Chris Anstey at +1-202-624-1972 or [email protected]<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p>
