German and U.S. job woes mount

By Bill Berkrot and Jason Neely

NEW YORK/LONDON (Reuters) - Global job woes worsened on Wednesday on bleak employment data from the United States and Germany, while microchip giant Intel Corp warned yet again that slack demand for computers would hurt its revenue.

Intel's announcement that fourth-quarter revenue would likely fall 23 percent followed news from British retailer Marks & Spencer that it would begin cutting jobs.

That was further bad news just a day after aluminum maker Alcoa said it would slash more than 15,000 jobs and U.S.-Dutch petrochemicals maker LyondellBasell filed for bankruptcy protection for its U.S. operations.

Meanwhile, the Bank of England is expected to cut rates by 50 basis points to a record low of 1.5 percent on Thursday, according to economists polled by Reuters. And yet another business scandal surfaced -- this one in India.

A report by ADP Employer Services said U.S. private employers shed 693,000 jobs in December, up sharply from the 476,000 jobs lost in November and far more than economists had forecast.

The figures suggest the U.S. government's more comprehensive non-farm payrolls report, due on Friday, will show a loss of about 670,000 jobs, said Joel Prakken, chairman of Macroeconomic Advisers, which jointly developed the report.

The U.S. employment numbers had been expected to show half a million jobs were lost in December, pushing the 2008 total above 2.4 million.

Former U.S. Labor Secretary Robert Reich cautioned that if the U.S. Congress does not pass an economic stimulus plan soon the country will lose another 3 million jobs in 2009.

"Unemployment will rise to 10 percent of the workforce by the end of this year," said Reich, adding that "without federal action, next year could be even worse.

In Germany, unemployment rose in December -- the first rise since February 2006 -- bringing to an end a three-year labor market boom as the global financial crisis hits companies in Europe's largest economy.

Up by a bigger-than-expected 18,000 in seasonally adjusted terms, the jobless figures come as German lawmakers work on a second stimulus package expected next week that could total 50 billion euros ($67 billion).

Germany's ruling coalition is also discussing support measures worth up to 100 billion euros for firms in financial trouble, the Financial Times Deutschland newspaper reported.

CORPORATE SLUMP

Intel blamed its revenue forecast cut -- the second since November -- on weak demand for personal computers, and its shares fell 6 percent, pulling U.S. stock markets lower.

U.S. consumer demand, the engine of the world's largest economy, is likely to remain weak well into 2009 as households put away their credit cards and concentrate on saving money amid the nation's deepest recession in decades.