Economists Who Foresaw U.S. Payroll Surprise Now See Job Gains
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By Timothy R. Homan
Dec. 5 (Bloomberg) -- Some of the economists who anticipated the U.S. job market would see marked improvement in November now project job gains are around the corner, and possibly in the rearview mirror.
Payrolls fell by 11,000 workers, while the unemployment rate dropped to 10 percent. Jobs were forecast to decline 125,000, according to the median estimate of 82 economists surveyed by Bloomberg News. Estimates ranged from decreases of 30,000 to 180,000.
The drawdown in inventories and rising corporate profits are the most compelling reasons for payrolls to begin showing sustainable increases as soon as this month, these economists said. What’s more, the recent trend of upward revisions will probably continue, signaling the worst employment slump in the postwar era may have already ended.
“We could see a positive number for November next month,” said Stefane Marion, chief economist at National Bank Financial Inc. in Montreal, whose forecast of a 30,000 payroll drop was the closest. “Firms now are beginning to redeploy some of their cash flows” by hiring new workers, he said.
Revisions added 159,000 jobs to payroll figures previously reported for October and September, a report from the Labor Department showed yesterday in Washington. The previous month’s report added 91,000 for September and August.
Profits, Inventories
Corporate profits climbed 21 percent from January through September, the biggest three-quarter gain in five years, while inventories plunged at a record pace, according figures from the Commerce Department. Leaner stockpiles set the stage for recovery in production.
“If you run down your inventories hard, you also cut your labor force,” said Peter Possing Andersen, an economist at Danske Bank A/S in Denmark who projected a decline of 50,000 jobs for November. He said the ramp up in production means the manufacturing industry, which has cut workers for the past two years, may stabilize and begin hiring in “a couple of months.”
Still, some economists say that even if November’s figures are revised into positive territory, payrolls may not have reached their low point yet. “Revisions lately have been in the favorable direction,” said Neal Soss, chief economist at Credit Suisse in New York who forecast a 50,000 drop in payrolls. “We shouldn’t take that as evidence that we’re at the bottom.”
The improving labor market indicates the deepest U.S. recession since the 1930s may have ended, said the head of the group charged with making the call.
Yesterday’s report “makes it seem that the trough in employment will be around this month,” Robert Hall, who heads the National Bureau of Economic Research’s Business Cycle Dating Committee, said in an interview.
To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
Last Updated: December 5, 2009 00:00 EST
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