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: US employers probably cut the fewest jobs in October in more than a year as the economic recovery eased the worst labor-market slump since the 1930s, economists said in a report on Friday. Payrolls fell by 1,75,000 workers, the smallest drop since August 2008, according to the median estimate of 84 economists surveyed. The jobless rate may have climbed to a 26-year high of 9.9%, the survey also showed.
Companies such as Deere & Co are starting to recall staff after the world’s largest economy expanded last quarter at the fastest pace in two years, while Johnson & Johnson is among those cutting back further. Mounting unemployment is one reason Federal Reserve policy makers this week reiterated a pledge to keep their key interest rate low for an “extended period.”
“Employers remain cautious,” said Chris Low, chief economist at FTN Financial in New York. “As a result, employers are unlikely to start expanding their employee base any time soon, but are also unlikely to continue rapid layoffs.” Economists’ payroll forecasts ranged from declines of 105,000 to 250,000.
The October projection would bring total jobs lost since the recession began in December 2007 to 7.4 million, the biggest decline of any economic slump since the Great Depression. Monthly losses accelerated after the collapse of Lehman Brothers Holdings Inc in September 2008 and peaked at 7,41,000 in January.
Neal Soss, chief economist at Credit Suisse in New York, is among those saying Friday’s report may show an increase in hiring of temporary workers, which will be a harbinger of gains in overall employment. Payrolls at temporary-help agencies often turn up before total employment because companies are not certain increases in demand will be sustainable enough to warrant the expense of taking on permanent staff.
Economists surveyed last month projected the jobless rate will exceed 10% by early 2010 and average 9.9% for all of next year even as the economy expands 2.4%. Fed officials met in Washington this week and signaled that a return to economic growth alone won’t result in higher interest rates. Economist Joseph LaVorgna of Deutsche Bank Securities Inc. in New York said in a note to clients that the jobless rate is “the dominant variable driving changes in the fed funds” rate, and the central bank “has never raised rates with unemployment rising.”
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