Gloom ahead of key US jobs report

According to a private sector survey released Wednesday US firms created a paltry 91,000 jobs last month, indicating a long slog ahead to reclaim the nearly nine million jobs lost since the financial crisis.

"Like August, this month's jobs report continues to show modest job creation," said Gary Butler, the head payrolls company ADP, which produced the report.

Although it is often difficult to draw a straight line between ADP's reports and Friday's key government report, economists said recent news did not portend stellar jobs growth.

The ADP does not include government payrolls, which have been steadily shrinking as local authorities shed positions to cut costs.

"In Friday's employment report, we expect the unemployment rate to be unchanged at 9.1 per cent for the third straight month," said Jeffrey Greenberg, an economist with Japanese bank Nomura.

Ian Shepherdson, chief US economist with High Frequency Economics said the data pointed to a familiar picture of modest job creation in the private sector being eroded by public-sector cuts

"We think this report is consistent with Friday's number coming in at about 50,000 (jobs created during September), comprising 100,000 private and -50,000 government jobs."

That would still be better than August's stunning number: zero net jobs created, with 17,000 new private-sector jobs offset by 17,000 shed in government.

But a pickup to 50,000 net new jobs would be less than half that needed just to keep up with population growth, much less bring down the jobless rate.

Pessimists received further support from other data released Wednesday.

According to outplacement firm Challenger, Gray & Christmas said that employers last month announced plans to shed 115,730 workers from their payrolls, "the worst job cut month in over two years."

The firm reported "heavy reductions" in the military "signaling what may lie ahead as the federal government seeks across-the-board cuts in spending."

A poor report on Friday would heap pressure on Barack Obama's White House, which has been unable bring the unemployment rate down below 8.8 per cent since the 2008-2009 recession ended.

In response the administration is touting a $447 billion jobs bill which some economists believe could help create 1.9 million jobs, but has butted up against Republican opposition in Congress.

On Wednesday a host of Obama's top lieutenants spoke in support of the plan, including Treasury Secretary Timothy Geithner who described it as a "very smart package of reforms."

Acknowledging Federal Reserve chairman Ben Bernanke's assertion that "the recovery is close to faltering," Geithner said the "the question is what can we do?"

"If Congress does not act growth will be weaker here," he added.