US jobless rate seen rising
The jobless rate probably rose in October as US employers kept a tight rein on payrolls with the nation closing in on the so-called fiscal cliff, economists said before a report this week.
A net 125,000 workers were added to headcounts following an increase of 114,000 in September, according to the median forecast of 72 economists surveyed by Bloomberg before the November 2 Labour Department figures. The unemployment rate climbed to 7.9 per cent last month from a three-year low of 7.8 per cent, the survey showed.
“We’re just treading water, getting the labour market to grow fast enough to cover population growth,” said Joshua Dennerlein, a US economist at Bank of America in New York. The “drop in unemployment was probably not sustainable.”
Hiring may stay restrained as concern mounts that an economy growing at a two per cent pace is not strong enough to weather the tax increases and spending cuts slated to take effect if lawmakers fail to act by year’s end. Coming just days before the election, the report may also help sway voters still trying to decide between giving President Barack Obama another four years and changing course with Republican challenger Mitt Romney. Prior to September, joblessness had exceeded eight per cent for 43 months, the longest such stretch since at least 1948. At 7.8 per cent, unemployment last month matched the rate at the time Obama took office in January 2009.
While the pace of job creation has slowed relative to the first half of the year, consumers are still managing to spend. The economy expanded at a two per cent annual rate in the third quarter, more than forecast and boosted by household purchases, Commerce Department figures showed last week.
A report today may show consumers ended the quarter on a strong note. Household spending increased 0.6 per cent in September, the biggest gain in seven months, according to the median estimate in a Bloomberg survey.
The Conference Board’s consumer sentiment index may have risen to 73, the highest level in four years, economists also project ahead of October 30 figures.
At the same time, companies are cutting back in the face of the fiscal cliff, more than $600 billion in tax increases and spending cuts that will take place in place in 2013 unless Congress can reach a budget compromise. Spending on equipment and software was unchanged in the third quarter, the weakest reading in three years, a report showed on October 26.
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