Oct. 3 (Bloomberg) -- The U.S. economy may have lost jobs in September for an eighth consecutive month, and the unemployment rate may have climbed to 6.2 percent, economists said in advance of a government report today. Payrolls may have declined by 25,000 last month, based on the median of 70 estimates in a Bloomberg News survey of economists, bringing to 437,000 the total of jobs lost this year. Unemployment would be up from 6.1 percent in August. The Labor Department issues the report at 8:30 a.m. in Washington ``Labor markets are soft, but there is some improvement over the kind of big loss we saw'' earlier in the year, said Peter Kretzmer, a senior economist at Banc of America Securities in New York. ``We ought to be seeing some employment gains in the fourth quarter.''
The statistics may fuel charges that President George W. Bush hasn't done enough to spur the economy into creating more jobs. The administration and many economists argue that strengthening consumer and business spending, rising stock prices and expanding corporate profits foreshadow renewed hiring. Contributing to the debate, economists say, are discrepancies in the government's surveys to determine whether jobs are growing or shrinking. At 10 a.m. Washington time, the Institute for Supply Management may report that service industries, which make up more than 70 percent of the economy, expanded at a slower pace last month, economists said. The ISM's non-manufacturing index may have eased to 63 in September from 65.1 in August, based on the median of forecasts. Readings above 50 signal expansion.
Accelerating Growth
The U.S. economy grew at a 3.3 percent annual rate in the second quarter, more than double the rate in the first three months of the year. A burst in consumer and business spending powered the gain, economists said, and probably carried over into the third quarter. Economists estimated that gross domestic product grew at a 4.5 percent annual pace from July through September, based on the median of 59 forecasts in a Bloomberg News survey taken Aug. 28 to Sept. 9. The poll found a median estimate of 4 percent growth for the final three months of the year. Corporate profits may have climbed 16 percent last quarter, the fastest pace in almost three years, as companies cut costs and sales got a boost from consumer spending on cars, home furnishings and travel, according to Thomson Financial, which compiles analysts' forecasts. Factory activity expanded in September for a third consecutive month, according to a report Wednesday from the Institute for Supply Management. Manufacturing inventories stood at 1.33 months' supply relative to sales in August, compared with a record of 1.31 months' in July.
Need for Hiring
Rising corporate profits and the need to rebuild inventories ``will require an increase in production that will require more people to be hired in order to get the job done,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York-based forecasting firm. Business surveys suggest that hiring may be around the corner. An index of small businesses' hiring plans rose to 21 in August, the highest since November 2002, according to a report last month from the National Federation of Independent Business. Twenty-two percent of 16,000 companies surveyed by Manpower Inc. said they plan to add workers in the fourth quarter, the most in a year. The Labor Department also is to announce today a preliminary adjustment to the payroll figures that will take into account data from state unemployment insurance records covering a larger sampling of companies, including those recently established.
Survey Discrepancies
The information is available only with a lag and will cover the 12 months ended in March. The final estimate will be announced in February 2004, when the government will officially revise the numbers. The preliminary estimate may help close the discrepancy between two surveys the government uses to compile its employment report. A poll of 60,000 households, used to calculate the monthly jobless rate, shows the economy has gained 842,000 jobs in the 12 months ended in August, before adjustment for seasonal variations. A separate survey of almost 400,000 businesses, used to determine how many jobs were lost or gained last month, shows 560,000 fewer jobs during the same period.
The gap between the findings of the two surveys totals 1.4 million positions. One element distorting the household survey was a 575,000 increase in employment in January that resulted when the 2000 Census showed the population, and therefore the number of people employed, was larger than previously estimated. The adjustment made the January figures, and the numbers since, not directly comparable to previous data, the Labor Department said at the time. Taking that into account, the rise in household employment over the last 12 months would be reduced to 267,000.
Different Definitions
The remaining difference has to do mainly with definitions, economists have said. The household survey includes many workers that aren't picked up by the payroll statistics. Military reservists on active duty; self-employed, agricultural and unpaid family workers; and paid household employees such as maids and nannies are among the categories excluded from the payroll totals. Subtracting those, the household employment survey would show a decline of 425,000 workers over the last year, according to a study by Alan Krueger, an economics professor at Princeton University, published in the New York Times last month. That would leave the household figures 135,000 shy of the loss shown in the payroll statistics.
Past Revisions
Past experience suggests the payroll figures will probably be revised higher next year, bringing them closer to the household totals, according to a study by John Kitchen, the chief economist of the House Budget Committee, released in August. Early in a recovery, the payroll totals underestimate employment by 40 percent to 70 percent, according to the report. That is because the survey fails quickly enough to include hiring by newly created companies, the sort of job gains often associated with an economy emerging from recession. ``Clearly, there is a substantial track record of the establishment payroll employment estimates under predicting the `true' jobs performance in early expansions,'' Kitchen said in the report. Kitchen was appointed by the House Republican leadership. That history may no longer be applicable. The government now uses a different sampling method when selecting the 160,000 companies it canvasses. The new method is able to pick up new businesses in a more timely manner, the Labor Department said.
`Very Different Now'
``The payroll survey is very different now than it was during the last turning point'' in the economy, said Tom Nardone, chief of the Division of Labor Force Statistics. ``If what you are interested in is counting wage and salary jobs, the payroll survey has a clear advantage.'' The debate has led some economists to focus on a tested indicator of labor market conditions, the unemployment rate. ``If there was only one thing in life that I was allowed to know to do my job, give me the unemployment rate,'' said James Glassman, senior economist at J.P. Morgan Securities in New York. ``It tells you about relative growth, excess capacity, and it's a political lightening rod.'' //www.bloomberg.com