/www.bloomberg.com/
By Carlos Torres and Alex Tanzi
Washington, Sept. 29 (Bloomberg) -- Unemployment rose in September as the U.S. economy failed to create any jobs, a report this week will probably show.
The jobless rate increased to 5.9 percent this month, reversing the drop of 0.2 percentage point in August, a Labor Department report may show Friday, according to the median estimate of 52 economists a Bloomberg News survey. The rate would be just below the eight-year high of 6 percent reached in April.
Companies probably added no workers this month, the first time payrolls haven't increased since April, when a 13-month string of declines ended. Economists say the U.S. needs to create 100,000 to 150,000 new jobs each month to reduce unemployment.
``We have been talking about a jobless expansion for a while, and we are going to talk about it some more,'' said David Wyss, chief economist at Standard & Poor's in New York.'' The uneven pace of economic growth means ``you aren't going to get the unemployment rate coming down.''
The economy will probably grow 2.5 percent this year and 3 percent in 2003, based on the results of a quarterly Bloomberg News survey reported Friday. The economy grew at an average rate of 3.6 percent a year from 1992 to 2000. That pace helped the jobless rate fall from a peak of 7.8 percent in June 1992 to a low of 3.9 percent in October 2000 as the economy added an average of 224,000 jobs each month over those nine years.
Job Market
The deteriorating job market reflects a rise in new claims for unemployment insurance benefits that suggests firings are on the rise. Claims reached a five-month high of 433,000 in the first week of September, 50,000 more than applied at the start of August.
Claims probably rose to 410,000 in the week that ended Saturday from 406,000 a week earlier, according to economists in the Bloomberg News survey. That would be the sixth consecutive week in which claims exceeded 400,000, a level that economists say indicates a weak job market. The Labor Department report is scheduled for release on Thursday.
Applications for unemployment benefits may stay elevated in coming months. SBC Communications Inc. was among several companies last week that announced more job reductions. The second-largest U.S. local-telephone operator said it will slash 11,000 positions by early 2003 because of increased competition and slower economic growth. About 9,000 of those cuts will take place in the final three months of the year. SBC had already cut 10,000 employees from payrolls this year.
Factory Reports
Sluggish growth is apparent among the nation's factories, a report from the Institute for Supply Management Tuesday will probably show. The Tempe, Arizona-based group's factory index rose to 51 from 50.5 a month earlier, according to the median of 36 forecasts in the Bloomberg News survey. While readings greater than 50 signal growth, the index had been as high as 56.2 as recently as June.
``Manufacturers have grown increasingly nervous about the near-term economic outlook and have pulled back a bit on restocking depleted inventories,'' said Joseph Abate, a senior economist at Lehman Brothers Inc. in New York.
A separate index from purchasing managers covering manufacturing in the Chicago area scheduled for tomorrow will probably drop to 53 from 54.9 in August, the survey found.
Manufacturers probably eliminated 21,000 jobs in September, the 26th straight decline, the Labor Department's jobs report may show. A separate report from the Commerce Department Thursday may show factory orders fell 0.3 percent in August, the second decline in the last three months, after rising 4.7 percent in July
Construction
As manufacturing slows, construction is slumping. Spending on all construction probably fell 0.2 percent in August, the fourth straight month without an increase, a Commerce Department report Tuesday is expected to show. The drop was probably led by declines in office and factory construction only partly offset by increases in spending on housing.
Growth in services, the biggest part of the economy, probably showed little improvement in September, a separate report from the Institute for Supply Management is likely to show Thursday. The group's index of retail, financial services, construction and other non-manufacturing companies probably rose to 51.4 from 50.9. That compares with a high of 60.1 reached in May. Readings greater than 50 indicate expansion.