Data may show US growth still at risk

By Bob Willis  |   2008-6-30  |     NEWSPAPER EDITION

UNITED States employers probably cut jobs in June for a sixth consecutive month, while manufacturing contracted at a faster pace, signaling the expansion is still at risk, economists said before reports due out this week.

Payrolls shrank by 60,000 workers, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department's report on Thursday. The unemployment rate may have fallen after jumping last month by the most in two decades.

Mounting job losses, record gasoline prices and tumbling home values have crushed consumer confidence, raising concern that spending will retrench once the lift from the tax rebates fades. Businesses are also purchasing less equipment as fuel costs soar, prompting factories to scale back.

"Job growth is going to be non-existent for the next six months," Maria Fiorini Ramirez, president of MFR Inc in New York, said in an interview with Bloomberg Television. "The economy is sort of staggering along."

The projected drop in payrolls would follow a decline of 49,000 in May that brought the number of jobs lost so far this year to 324,000. Factory payrolls probably shrank by 30,000, economists forecast, after a 26,000 decline the prior month.

The jobless rate this month probably fell to 5.4 percent from 5.5 percent in May, according to the survey median. The rate jumped a half percentage point last month, the most since February 1986.

Early release

The report will be released on a Thursday rather than the customary first Friday of the month because of the Fourth of July holiday in the US.

Manufacturing, which accounts for about 12 percent of the economy, probably shrank for a fifth month in June, the Institute for Supply Management's factory index may show on Tuesday. The gauge fell to 48.6 from 49.6 the prior month, according to economists polled. A reading less than 50 signals contraction.