The economy in the U.S. probably stopped losing jobs in December for the first time in almost two years, a sign the recovery strengthened heading into 2010, economists said before a report today.
Rising global sales mean American companies including Caterpillar Inc. may start hiring again this year after carrying out the biggest job cuts in the post-World War II era. The Federal Reserve has pledged to keep interest rates low and the Obama administration has announced measures to boost employment at small businesses as the jobless rate is forecast to exceed 10 percent through the first half of the year.
“It does look like the labor market is turning a corner,” said Julia Coronado, a senior economist at BNP Paribas in New York. “We expect a very, very modest rise in hiring that won’t be enough to stop the unemployment rate from going higher.”
The Labor Department’s report is due at 8:30 a.m. in Washington. Economists’ payroll forecasts ranged from a decline of 100,000 to an 85,000 gain.
Record Jump
A 10 percent reading in December would put the average jobless rate last year at 9.3 percent. The increase from 5.8 percent in 2008 would mark the biggest annual surge in records going back to 1940.
The 7.2 million drop in payrolls over the past two years has been the biggest as a percentage of all jobs since World War II was ending in 1944-45.
Monthly payroll losses accelerated after the collapse of Lehman Brothers Holdings Inc. in September 2008 and peaked at 741,000 in January 2009. The economy lost 11,000 jobs in November.
President Barack Obama on Dec. 8 proposed additional spending on the nation’s transportation system, tax credits to spur hiring by small businesses and incentives to make homes more energy efficient in a second round of efforts to cut the jobless rate. In early 2009, the administration’s economic advisers forecast the $797 million stimulus plan would keep unemployment below 8 percent.
Census Jobs
In another government boost to hiring, the Census Bureau will hire 1.15 million temporary workers in the first half of the year to conduct the population count that takes place every 10 years. The boost to payrolls may peak at about 700,000 in May before workers begin getting dismissed, according to a forecast by economist Lori Helwing at BofA Merrill Lynch Global Research in New York.
“They’re going to hire an army of people,” said Coronado. “In some sense, this acts as a stimulus package and is a timely coincidence, coming so early in the recovery.”
The economy grew at a 2.2 percent annual rate in the third quarter, the first gain in more than a year. Economists at JPMorgan Chase & Co. and Credit Suisse are forecasting fourth- quarter growth of more than 4 percent.
Staffing at temporary employment agencies jumped the most in five years in November, which some economists and executives view as a sign total payroll growth is imminent.
Temporary Help
Increases in temporary hiring are “a classic part of the recovery,” Manpower Inc. Chief Executive Officer Jeffrey Joerres said in a Bloomberg Television interview Dec. 31. The firm is seeing “slow but steady increases in people who are out on assignment,” he said.
Manufacturing, which accounts for about 12 percent of the economy, has been a driver of the recovery and is projected to continue to expand. The strength has yet to translate into more factory jobs. Manufacturing payrolls may drop by 35,000 after a decline of 41,000 in November, according to economists surveyed by Bloomberg, as companies increase productivity to cut costs.
Colder and wetter weather than average during the Dec. 12 survey week probably restrained the payroll numbers last month, compared with the unseasonably mild early November, Raymond Stone, managing director of Stone & McCarthy Research Associates in Skillman, New Jersey, said in a note to clients. “Weather sensitive” industries such as construction and travel may see “weaker” payroll numbers, he said.
Five-Year Revisions
With today’s report, the Labor Department will also revise figures from its household survey used in calculating the unemployment rate going back five years. Benchmark revisions to the payroll data will be announced in February.
U.S. stocks rallied in the second half of 2009 as evidence of an economic recovery mounted. The Standard & Poor’s 500 Index climbed 65 percent since sinking to a 12-year low on March 9, ending 2009 at 1,115.1.
Among companies resuming hiring, Caterpillar, the world’s largest maker of bulldozers, aims to bring back some laid-off workers this year, Chief Executive Officer Jim Owens said last month.
“We’ll gradually begin to call people back and to rebuild our overall sales and ability to ship product,” Owens said in a Dec. 11 interview with Bloomberg Television. “It will gradually begin to pick up as 2010 unfolds.”
By Bob Willis – businessweek.com
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