Reuters (Link) (July 2, 2009)
The U.S. economy likely shed 363,000 non-farm jobs in June, a steeper estimate than originally forecast, while the unemployment rate hit a 26-year high, but for a nation mired deep in recession that may be good news.
The U.S. Labor Department's report due on Thursday is expected to depict an economy still wallowing in recession, the deepest since at least World War Two. But the report will likely confirm the pace of job loss has slowed, suggesting the 18-month-old recession is easing its grip.
The report, which will be dissected by financial markets for clues on the economy, is expected to show the unemployment rate rose to 9.6 percent -- its highest since June 1983 -- from 9.4 percent in May, according to a Reuters poll of economists.
The initial estimate for payroll losses was 355,000 non-farm jobs last month, according to the median forecast of 62 economists.
But an updated poll this week of 76 economists raised the figure to 363,000 jobs. The department said in May 345,000 positions were eliminated by employers.
However, the drop still reflects a sharp slowing in job losses for an economy that shed an average of 691,000 jobs a month in the first quarter.
Although employers will have shed workers for 18 straight months, the trend has been moderating since job losses totaled 741,000 in January.
In a separate report, ADP Employer Services said on Wednesday U.S. private employers cut 473,000 jobs in June, more than expected but down from the 485,000 jobs lost in May. June's job loss was the smallest since October.
The Reuters poll on the Labor Department report estimated the pace of job cuts in the hard-hit manufacturing sector likely slowed to 148,000 in June from a 156,000 loss the previous month.
If it comes in close to the median forecast, or if job losses are even smaller, the report will likely be viewed as the latest sign the recession, the longest since the Great Depression, was winding down.
Heartened by a spate of relatively upbeat reports, economists have become increasingly convinced the recession will lift in the second half of the year.
Adding to optimism was a drop in planned layoffs in June, the fifth straight month.
Planned job cuts at U.S. firms fell 33 percent in June to 74,393, the lowest since March 2008, according to a report by Challenger, Gray and Christmas, Inc, the consulting firm.
Even if the economy is close to a turn, the unemployment rate is expected to continue to march higher, with many economists expecting it to peak around 10 percent.
Wage gains have weakened along with the labor market. Economists said they expect average hourly earnings rose just 0.1 percent in June, the same as in May. The length of the average workweek is expected to hold at 33.1 hours. †
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