Unemployment in the U.S. probably kept near 10 percent - zt

Unemployment in the U.S. probablykept hovering near 10 percent in October, one reason therecovery that began more than a year ago has disappointedFederal Reserve policy makers, economists said before a reportthis week.

The jobless rate held at 9.6 percent for a third month,according to the median of 61 estimates in a Bloomberg Newssurvey heading into a Nov. 5 report from the Labor Department.Payrolls likely rose by 60,000, the first gain since May.

Figures last week showed third-quarter growth and inflationin the world’s largest economy fell short of the Fed’s long-termforecasts. Speculation the central bank will announce anotherround of large-scale asset purchases, or quantitative easing,after its Nov. 2-3 meeting propelled stocks this month andpushed the yield on two-year Treasury notes to a record low.

“We still have a ways to go to improve the job market,”said Michael Gregory, a senior economist at BMO Capital Marketsin Toronto. “The payrolls report will confirm the necessity ofthe quantitative easing the Fed is expected to announce.Unemployment will remain stubbornly high.”

The jobs report may show private hiring, which excludesgovernment agencies, climbed 80,000 after a 64,000 gain theprior month. Overall payrolls fell 95,000 in September,reflecting the dismissal of temporary workers hired by thegovernment for the population count.

Persistent Joblessness

The unemployment rate projection for October would make itthe 15th month of joblessness at 9.5 percent or higher, thelongest stretch since records began in 1948. The worst recessionsince the 1930s caused the loss of 8.4 million jobs.

The need to lift the labor market is one reason investorsexpect more steps from the Fed, which has already cut interestrates almost to zero and bought $1.7 trillion in securities.

“To the extent that we can do things to improve theeconomic environment, we certainly owe it to the millions ofpeople who are unemployed to do so,” Fed Bank of New YorkPresident William Dudley said in response to audience questionsafter a speech on Oct. 25.

Fed and government stimulus has helped to sustain therebound. The U.S. expanded at a 2 percent annual rate lastquarter, up from a 1.7 percent pace the prior three months, theCommerce Department reported Oct. 29.

Consumer spending, which accounts for about 70 percent ofgross domestic product, climbed 2.6 percent last quarter, thebest showing of the recovery that began in June 2009, asretailers like Wal-Mart Stores Inc. cut prices to lure shoppers.

More Spending

A Commerce Department report tomorrow may show householdspending rose for a third month in September, while incomegrowth slowed, according to the Bloomberg survey. The figuresmay also show inflation cooled.

Expectations of more Fed action and rising corporateprofits helped lift the Standard & Poor’s 500 Index 3.7 percentin October, its second monthly advance. The gauge was down lessthan 0.1 percent on Oct. 29 to close at 1,183.26 in New York.

Even so, likely voters heading to the Nov. 2 congressionalelections think there hasn’t been much progress on the economy,a Bloomberg National Poll conducted Oct. 24-26 found.

Among other reports this week, the Institute for SupplyManagement’s manufacturing index, due tomorrow, may show factorygains are cooling after an inventory surge that put the industryat the helm of the recovery. The Tempe, Arizona-based ISM’sgauge of services, to be released Nov. 3, probably was little-changed from September, the Bloomberg survey showed.

Some companies plan to expand. Cedar Rapids, Iowa-basedRockwell Collins Inc., a maker of cockpit instruments andradios, last week said it’ll add 800 people, boosting staff by 4percent during the next 12 months. Ford Motor Co., the second-largest U.S. automaker, said it will spend $850 million and add1,200 jobs in Michigan by 2013 as sales rebound.

                        Bloomberg Survey

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                        Release    Period    Prior     Median
Indicator                 Date               Value    Forecast
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Pers Inc MOM%             11/1     Sept.      0.5%      0.2%
Pers Spend MOM%           11/1     Sept.      0.4%      0.4%
ISM Manu Index            11/1      Oct.      54.4      54.0
Construct Spending MOM%   11/1     Sept.      0.4%     -0.5%
ISM NonManu Index         11/3      Oct.      53.2      53.5
Factory Orders MOM%       11/3     Sept.     -0.5%      1.5%
Productivity QOQ%         11/4       3Q      -1.8%      1.0%
Labor Costs QOQ%          11/4      3Q P      1.1%      0.7%
Nonfarm Payrolls ,000’s   11/5      Oct.      -95        60
Private Payrolls ,000’s   11/5      Oct.       64        80
Manu Payrolls ,000’s      11/5      Oct.       -6        0
Unemploy Rate %           11/5      Oct.      9.6%      9.6%
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