WASHINGTON (Reuters) - The economy is expected to shed fewer jobs in March than the previous month, but still enough to drive the unemployment rate up, according to a Reuters poll, in a report likely to raise fresh concerns the U.S. may be closer to recession.
by Nancy Waitz
WASHINGTON (Reuters) - The economy is expected to shed fewer jobs in March than the previous month, but still enough to drive the unemployment rate up, according to a Reuters poll, in a report likely to raise fresh concerns the U.S. may be closer to recession.
The median forecast of 83 economists showed U.S. businesses are expected to have shed 60,000 jobs in March, which would mark the third straight monthly decline, after a 63,000 job loss in February.
Forecasts ranged from 150,000 jobs cut to 65,000 new jobs created.
!ADVERTISEMENT!The drop in March nonfarm payrolls is expected to have driven the jobless rate up to 5.0 percent, building on the 4.8 percent rate for the prior month, the economists predicted.
"A striking feature of this downturn is that employment losses are driven not by layoffs, but by a lack of hiring," said Societe Generale in its economic research. "The financial turmoil has eroded confidence and the uncertainty about future demand (is) delaying any hiring plans."
Economist warn that job losses could undermine consumer spending, which fuels two-thirds of economic activity, and tip the fragile economy into a recession.
"If payrolls are going to post triple-digit declines, which would be consistent with a full-blown recession, then the drivers will be sectors that have just begun to weaken in recent months," said economists at RBS Greenwich Capital.
Two sectors RBS economists say bear watching are retailers, which have shed close to 60,000 jobs the past three months, and the professional and business services category, which posted two straight monthly declines for the first time since early 2003.
A recession is generally defined as two straight quarters of economic contraction and the United States has not experienced one since a relatively mild eight-month recession from March 2001 to November 2001.
The employment report, to be released at 8:30 a.m. EDT on Friday will no doubt garner close attention from the Federal Reserve, which has left the door open for further interest rate cuts.
The central bank's policy-setting committee meets April 29-30 and it is expected to cut rates by at least another 25 basis points.
The Fed has cut interest rates by 3 percentage points since mid-September to its current 2.25 percent, including a relatively rare rate cut between scheduled meetings of its policy-making committee.
Analysts cautioned that the five-week strike at American Axle and Manufacturing Holdings Inc <AXL.N>, which has idled 30 General Motors Corp <GM.N> plants, could further depress the already gloomy payrolls.
"The key to the employment count is how many of these workers were off payrolls for the whole pay period including the 12th of the month -- some are in Canada, and some have continued to attend work for training or to do maintenance," said Global Insight economists Brian Bethune and Nigel Gault.
Two other reports were issued on Wednesday that offered slight glimmers of hope on the labor market.
ADP Employer Services said U.S. private sector employers added 8,000 jobs in March, confounding expectations of payroll cuts, and employment outplacement tracking firm Challenger, Gray and Christmas said planned layoffs by U.S. companies fell 26 percent in March to 53,579 from the previous month.
(Polling by Bangalore Polling Unit)
(Additional reporting by Burton Frierson in New York; Editing by Tom Hals)
