By John S. McClenahen Bruce Steinberg, chief economist for Merrill Lynch & Co., New York, believes that a continuing decline in U.S. jobs will cause the Federal Open Market Committee to cut U.S. interest rates at its next scheduled meeting on Nov. 6. Indeed, Steinberg anticipates still another cut of 25 basis points at the panel's Dec. 10 meeting, dropping the influential federal funds rate to 1.25%. The funds rate is currently 1.75%, a 41-year low. The U.S. economy shed 43,000 jobs in September, mostly in manufacturing and transportation, according to data released Oct. 4 by the U.S. Labor Department. That job loss figure is in stark contrast to the upwardly revised gain of 107,000 jobs in August. The department originally reported only a 39,000 increase for the month. Economists anticipated about a 7,000-job gain in September. "Job growth is sluggish despite decent economic growth because productivity gains are so strong," contends Steinberg. "Corporate restructuring activities are generating huge productivity gains, but keeping job growth tepid for the time being." Steinberg expects soon-to-be-released data to show that U.S. productivity grew at an annual rate of 5% from July through September. However, even as the U.S. economy lost jobs in September the overall U.S. unemployment rate fell to 5.6% from 5.7% in August. Economists generally were looking for an increase in the jobless rate to 5.9%. Steinberg suggests that the unexpected decline in the unemployment rate could be a product of statistical rounding, a rounding up of the numbers in August and a rounding down in September. "We still fully expect the unemployment rate to hit 6% or more in coming months," says Steinberg.