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Unemployment Probably Rose to 9.9% in the United States, as Employers Shed 175K Jobs in October!

Fri, Nov 6 2009, 12:45 GMT
by ecPulse.com analysis team

ecPulse.com

Investors are waiting impatiently for the infamous jobs report, as it should provide a better picture for the current conditions in the U.S. labor market, though we all know that the labor market is still under pressure from the ongoing economic weakness and will probably remain under pressure over the upcoming period, as companies continue to layoff workers in order to cut costs and survive the current weak conditions.

The U.S. Labor Department will release today its Non-farm payrolls for the month of October, whereas expectations signal that non-farm payrolls declined by 175,000 jobs in October following the prior reported drop of 263,000 jobs back in September, as employers continue to reduce their workforce amid the current weakness in demand levels.

Meanwhile, the unemployment rate which has been rising over the past few months is still expected to rise further in October, as unemployment is expected to rise to 9.9% a 26-year high from the prior reported estimate of 9.8%, and it seems that unemployment will indeed surpass 10% before this year ends, as employers are yet to start hiring new workers.

Rising unemployment has been one of the major drags to economic growth over the past period, as it directly affected income growth and accordingly consumer spending was hammered by ongoing job losses, and it seems now that spending will remain weak over the upcoming period, as unemployment continues to rise and as credit conditions continue to tighten.

The U.S. economy though has been able to grow during the third quarter by 3.5% as the government’s stimulus seemingly supported the economy, while we also witnessed a gradual improvement in economic activity during the third quarter, which further helped the economy, as it seems that the worst recession since WWII is coming to an end.

Moreover, average hourly earnings are expected to have risen in October by 0.1% inline with the prior reported rise, while compared with a year earlier, average hourly earnings are expected to have risen by 2.2% compared with the prior reported rise of 2.5%. Also, average weekly hours are expected to have risen in October to 33.1 from the prior reported estimate of 33.0.

Later on today, the wholesale inventories index is expected to show that inventories dropped in September by 1.0% following the prior reported drop of 1.3%, as wholesalers continue to adjust their inventory levels to meet the current sluggish demand levels, as inventories have been weighing down on economic activity over the past period, as seemingly producers and wholesalers are still expecting weak demand levels over the upcoming period.

The U.S. economy still has a long way to go before conditions are back to normal at least, whereas the economy is still expected to continue its recovery process over the upcoming few quarters, however the recovery is widely expected to be gradual and rather slow, as despite the recent improvement in economic conditions, yet rising unemployment is still posing huge threats to the anticipated recovery, and unless unemployment starts to drop noticeably, I don’t believe the economy will be able to meet its long term growth potentials…

Published on  Fri, Nov 6 2009, 12:46 GMT