/www.bloomberg.com/ By Carlos Torres and Terry Barrett
Washington, March 7 (Bloomberg) -- U.S. unemployment probably rose in February as the economy stumbled and companies curbed hiring amid the prospect of a war with Iraq, economists said in advance of a government report today.
The jobless rate rose a 10th of a percentage point to 5.8 percent last month, edging toward an eight-year high of 6 percent reached in December, based on estimates in a Bloomberg News survey of economists. The forecasters estimate that companies added no more than 10,000 workers to payrolls after a 143,000 increase in January.
``Businesses are being very cautious given the uncertain economic and geopolitical environment and aren't prepared to pick up hiring at this point,'' said Adrienne Warren, a senior economist at Scotia Capital in Toronto, who estimated that no jobs were created last month. ``We are in a period of very flat payroll growth for at least a couple more months.''
The report would provide further evidence that the economy flagged last month as war jitters mounted, prompting businesses to postpone hiring and investing. The call-up of military reservists in preparation for war may also depress civilian payrolls, economists said. Productivity rose 4.8 percent last year, the most since Harry Truman was president in 1950, enabling companies to produce more with fewer workers.
Consumer confidence slumped to a nine-year low last month, damped by the tight job market and slowing income growth. New claims for jobless benefits in the final week of the month were the highest this year.
Signs of Renewed Weakening
Rising joblessness ``raises the risk that the consumer won't have the strength to continue to support the economy,'' said Warren. Household spending accounts for two-thirds of gross domestic product.
The Labor Department is to issue its February jobs report at 8:30 a.m. Washington time today. The projected 5.8 percent unemployment rate is based on the median of 65 forecasts in the Bloomberg survey of economists.
At 3 p.m. today, the Federal Reserve will probably report that U.S. consumer borrowing in January fell for a third straight month as households restrained spending on credit cards and sought fewer loans for autos, economists surveyed by Bloomberg News said. Borrowing through credit cards and other loans, excluding mortgages, probably dropped by $1 billion in January after falling $4 billion a month earlier.
After the labor market showed signs of stabilizing in January, evidence of renewed weakening has mounted. Filings for state unemployment insurance averaged 409,000 a week in February, up from 387,000 the previous month. The number of people remaining on unemployment insurance rolls rose to 3.5 million in the week ended Feb. 22, up from 3.3 million in mid-January, according to government figures.
Hiring Plans
Employers announced plans in February to eliminate the most jobs since November as companies stepped up cost-cutting, according to a survey released this week by the Chicago-based placement firm Challenger, Gray & Christmas. Companies last month said they would cut 138,177 positions, 4.5 percent more than 132,222 in January.
The share of employers planning to hire in the second quarter of 2003 is low for this time of year, suggesting hiring will be sluggish, according to the results of a survey of 16,000 companies by Manpower Inc. last week.
While other concerns aren't hiring, manufacturers are still firing. An index of factory employment contracted at a faster pace last month, a survey by the Institute for Supply Management showed this week. Factories probably cut 30,000 jobs last month after trimming payrolls by 16,000 in January, the Bloomberg News survey found.
Agilent Job Cuts
Agilent Technologies Inc., a maker of computer chip and telecommunications testing gear, said it will cut 4,000 jobs, or 11 percent of its staff, after reporting its biggest quarterly loss because of falling demand. First-quarter orders fell 7.3 percent to $1.36 billion, Agilent said.
The drop in demand ``is really accentuated now by all the uncertainty in the world, the uncertainty with the economy, the uncertainty over terrorism and a potential war,'' Agilent Chief Executive Edward Barnholt said in an interview with Bloomberg Television last month. ``That's what's making the current situation even worse today.''
Today's payroll numbers may also be depressed by the activation of civilian workers for military duty. The U.S. ordered 91,358 reservists to mobilize from mid-January to mid-February, accounting for more than half of the 150,252 activated by Feb. 12, the week when the Labor Department conducted its payroll survey.
The Labor Department instructed companies to exclude from their payroll counts workers called up to serve in the armed forces because they are no longer in the civilian labor force.
Some economists are beginning to factor the call-up of military reservists into their forecasts. ``A swing of this magnitude is likely to have some impact on the payroll data,'' said David Greenlaw, senior economist at Morgan Stanley. This week he changed his February payroll estimate to a loss of 20,000 jobs from the addition of 25,000.
Still, affected companies may hire temporary workers to do the work of those called up, which may blunt the impact, said Rick McDonald, an economist at MMS International in Belmont, California.