Outlook Is BleakBy Reuters - | Posted 2008-11-06 Print
Fading demand from shell-shocked consumers fearful for their jobs is a key factor in the U.S. slowdown, and major U.S. retail chains posted disappointing October sales as consumers shunned all but the most crucial of purchases.
OUTLOOK IS BLEAK
On Friday, the Labor Department is set to release its report on October employment with Wall Street economists forecasting a whopping 200,000 more jobs will be slashed, a 10th straight month of declining payrolls.
A report Wednesday from the Institute for Supply Management showed the services sector shrank sharply in October and a report from ADP Employer Services said private-sector companies cut payrolls dramatically -- implying job losses to be reported Friday could even top current forecasts.
The retail sales report underlined the impact of the financial crisis that grips the U.S. economy. Retail chains posted their weakest sales in more than three decades, foreshadowing what likely will be one of the worst holiday sales seasons in years in the key weeks from Thanksgiving to Christmas.
The International Council of Shopping Centers described the retail sales environment as "simply awful" and said the October results were the worst it had seen in 35 years.
One exception was discounter Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz),, which managed a better-than-expected increase of 2.4 percent in October sales at U.S. stores open at least a year.
The Labor Department said unit labor costs, a gauge of inflation and profit pressures that the Federal Reserve monitors, jumped at a 3.6 percent annual rate in the third quarter after declining 0.1 percent in the second quarter. That was well ahead of forecasts for a 2.8 percent annual rate of increase but many input prices, such as for commodities, now are easing.
Hours of work dropped at a 2.7 percent rate in the third quarter, a fifth straight quarter of decline. Real compensation per hour -- which takes into account the impact of rising prices on wage gains -- shrank for a third quarter in a row, falling at a 1.9 percent rate.
(Additional reporting by Burton Frierson in New York, Editing by Andrea Ricci)
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