Washington: Unemployment in the US probably kept hovering near 10 per cent in October, one reason the recovery that began more than a year ago has disappointed Federal Reserve policy makers, economists said before a report this week.
The jobless rate held at 9.6 per cent for a third month, according to the median of 61 estimates in a Bloomberg News survey heading into a November 5 report from the Labor Department. Payrolls likely rose by 60,000, the first gain since May.
Figures last week showed third-quarter growth and inflation in the world's largest economy fell short of the Fed's long-term forecasts. Speculation the central bank will announce another round of large-scale asset purchases, or quantitative easing, after its November 2-3 meeting propelled stocks this month and pushed the yield on two-year Treasury notes to a record low.
"We still have a ways to go to improve the job market," said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. "The payrolls report will confirm the necessity of the quantitative easing the Fed is expected to announce. Unemployment will remain stubbornly high."
The jobs report may show private hiring, which excludes government agencies, climbed 80,000 after a 64,000 gain the prior month. Overall payrolls fell 95,000 in September, reflecting the dismissal of temporary workers hired by the government for the population count.
Persistent joblessness
The unemployment rate projection for October would make it the 15th month of joblessness at 9.5 per cent or higher, the longest stretch since records began in 1948. The worst recession since the 1930s caused the loss of 8.4 million jobs.
The need to lift the labour market is one reason investors expect more steps from the Fed, which has already cut interest rates almost to zero and bought $1.7 trillion in securities.
"To the extent that we can do things to improve the economic environment, we certainly owe it to the millions of people who are unemployed to do so," Fed Bank of New York President William Dudley said in response to audience questions after a speech on October 25.
Fed and government stimulus has helped to sustain the rebound. The US expanded at a 2 per cent annual rate last quarter, up from a 1.7 per cent pace the prior three months, the Commerce Department reported October 29.
Consumer spending, which accounts for about 70 per cent of gross domestic product, climbed 2.6 per cent last quarter, the best showing of the recovery that began in June 2009, as retailers like Walmart Stores Inc. cut prices to lure shoppers.
More spending
A Commerce Department report tomorrow may show household spending rose for a third month in September, while income growth slowed, according to the Bloomberg survey. The figures may also show inflation cooled.
Expectations of more Fed action and rising corporate profits helped lift the Standard & Poor's 500 Index 3.7 per cent in October, its second monthly advance. The gauge was down less than 0.1 per cent on October 29 to close at 1,183.26 in New York.
Even so, likely voters heading to the November 2 congressional elections think there hasn't been much progress on the economy, a Bloomberg National Poll conducted October 24-26 found.
Among other reports this week, the Institute for Supply Management's manufacturing index, due tomorrow, may show factory gains are cooling after an inventory surge that put the industry at the helm of the recovery. The Tempe, Arizona-based ISM's gauge of services, to be released November 3, probably was little- changed from September, the Bloomberg survey showed.
Some companies plan to expand. Cedar Rapids, Iowa-based Rockwell Collins Inc., a maker of cockpit instruments and radios, last week said it'll add 800 people, boosting staff by 4 per cent during the next 12 months. Ford Motor Co., the second-largest US automaker, said it will spend $850 million and add 1,200 jobs in Michigan by 2013 as sales rebound.
