Job losses in US slowed in Aug: Survey

Employers in the US probably cut jobs in August at a slower pace and manufacturing grew for the first time in more than a year, adding to evidence the worst recession since the 1930s is ending, economists said before reports this week.

Payrolls fell by 230,000 workers, the smallest decline in a year, according to the median of 65 estimates in a Bloomberg News survey ahead of a September 4 Labor Department report. Figures from a private group of purchasing managers on September 1 may show the first expansion at factories since January 2008.

“We are heading out of the tunnel,” said Jonathan Basile, an economist at Credit Suisse in New York. “It doesn’t mean we’ll have a very rapid recovery because consumers still face many headwinds.”

The worst employment slump in the post-World War II era, a record loss of wealth and mounting foreclosures are among the obstacles American households have to overcome before any recovery can gain speed. Government programmes, including “cash for clunkers” and credits to first-time homebuyers, may help the economy expand in the second half of the year.

The jobless rate in August is likely to climb to 9.5% from 9.4% the prior month, according to economists surveyed by Bloomberg. Unemployment will reach 10% by early 2010, a Bloomberg poll this month showed.

Payroll losses peaked at 741,000 in January, the most since 1949. The US has lost 6.7 million jobs since the recession began in December 2007. Some companies continue to eliminate jobs to cut costs and boost profits amid weak sales.

Whirlpool, the world’s largest appliance maker, said last week it will close a manufacturing plant in Evansville, Indiana, resulting in the loss of 1,100 jobs, or about 1.6% of the company’s workforce.

A record reduction in inventories over the first half of the year sets the stage for production to rebound, economists said. Companies including General Motors and Chrysler Group, both out of bankruptcy, may benefit from higher sales and a boost to output from the government’s “cash-for-clunkers” effort.

The incentive programme, which offered buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles, produced almost 700,000 automobile sales before ending on Aug. 24, the Transportation Department said last week.

Ford Motor, the second-largest US automaker, posted its first monthly US sales gain in July since 2007. “We had a solid July sales month and we are headed toward an even stronger August,” Ford marketing chief Ken Czubay said last week in a statement.