Saturday, 8 October 2005

Katrina hits US jobs but economists see positives

The US economy suffered net job losses in September, no thanks to Hurricane Katrina. Reuters reports.

The U.S. economy shed 35,000 jobs in September, fewer than feared despite Hurricane Katrina...a Labor Department report on Friday showed... However, the national unemployment rate rose to 5.1 percent last month -- highest since May -- from 4.9 percent in August... The department indicated that September payroll growth likely would have been in line with the 194,000 jobs-a-month average that have been created over the past year if not for the blow delivered by Katrina...

The department revised up its estimates for job growth in July and August by a combined 77,000. It said there were 211,000 jobs created in August instead 169,000 and 277,000 in July rather than 242,000...

In a measure of Katrina's direct effect on the job market, the department said some 80,000 jobs were lost in leisure and hospitality industries -- not surprising since hard-hit New Orleans is tourist magnet -- compared with a 37,000-job gain in August. Retail industries lost 88,000 jobs last month and factories 27,000 -- a fourth month in a row for layoffs on the factory floor. There were some areas in which jobs were created last month, including 52,000 new jobs in professional and business services, 49,000 in education and health and 31,000 in the government.

Reactions to the numbers picked up by Reuters were positive. Joel Naroff of Naroff Economic Advisors in Holland, Pennsylvania:

The good news is that job growth had been picking up and that should cushion the fall caused by the hurricanes... [T]his is just another reason to keep hiking rates.

Bill Cheney of John Hancock Financial Services Inc. in Boston:

Hurricane Katrina undoubtedly devastated individuals and communities in the Gulf Coast, but on a macro-economic basis it's clear that the U.S. economy has more than enough momentum to absorb the hit and recover quickly.

The macroblog agrees.

To me, that is starting to look like pretty healthy net job creation.

And across the Pacific, there is more positive news from Japan.

The index of coincident economic indicators stood at 88.9 percent after sliding to 30.0 in July, the Cabinet Office said in a preliminary report...

The index of leading indicators, predicting economic developments about six months down the road, came to 100.0 percent with all of 10 indicators available in the preliminary report showing positive readings. It is the first time for the index of leading indicators to post 100 percent since December 2000.

But it is not so positive across the Atlantic.

Industrial production in Germany, Europe's largest economy, fell for the first month in three in August as near-record oil prices damped the economic outlook. Production at factories, utilities, construction sites and mines declined 1.6 percent from July, when it gained 1.2 percent, the Economy and Labor Ministry said in Berlin today.

The OECD composite leading indicators provide another perspective on the economic outlook.

Weak to moderate activity lies ahead in the OECD area, according to the latest composite leading indicators (CLIs). August data show weakening performance in the CLI’s six month rate of change in the United States and Canada but improved performance in the Euro area and Japan.

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