US braced for poor jobs report

The US government is expected to reveal Friday that unemployment was stuck at a painfully high 9.1 percent last month, though some economists are not ruling out a surprise drop. Most analysts are forecasting the jobless rate will remain above nine percent for the fourth straight month, defying efforts by President Barack Obama to encourage hiring ahead of elections a year from now. "I suspect that the October employment report is going to be very much in line with September's" said Stephen Stanley, Pierpont Securities chief economist, pointing to an economy still treading water. That will be bad news for the 14 million Americans who are looking for a job, and for Obama, who hopes to keep his after the 2012 election. "To actually improve the unemployment rate, we need to be significantly above where we are today on job creation," said Matt McDonald of Hamilton Place Strategies. "To get below eight percent unemployment by election day, the economy needs to create 263,000 jobs per month." Economists believe that in October nowhere near that many jobs were created. Most analysts estimated that Friday's Labor Department report will show the economy spawned a total of 85,000 jobs in October, down from 103,000 in September. There was little encouragement for a more optimistic view from data released on Wednesday. Private payrolls firm ADP reported that US companies added 110,000 net jobs last month, down from 116,000 in September. That would very likely leave the jobless rate has been stuck at or above nine percent, where it has been for all but two of the past 29 months. But a brave few economists believe the pessimism may be overdone. "(With) employment up over 300k the last two months, we think the unemployment rate could surprise the financial markets," said analysts at Deutsche Bank. That view was shared by economist Brian Jones of Societe Generale. "Labour market conditions probably improved further in October. We expect nonfarm payrolls to rise by an above consensus 135,000 ... the largest job gain since last April. "The civilian jobless rate likely retreated to a seven-month low of 8.9 percent." The glimmers of hope have come from a poll by Gallup that showed unemployment falling dramatically, as well as increased growth in the last quarter. After phone interviews with 18,000 adults, Gallup projected that unemployment was at 8.3 percent for the 30 days ending October 23, "down sharply from 9.0 percent" from the previous period. "As a result, the government next week is likely to report a seasonally adjusted October unemployment rate of less than 9.0 percent." According to Deutsche Bank: "This could be meaningful, because the trend in the Gallup Survey tends to broadly match the trend in the official unemployment rate."