Saturday, 6 September 2008

US unemployment rate hits 6.1%

Non-farm payrolls fell more than expected but the main focus of yesterday's employment report was the unemployment rate. Bloomberg reports:

The U.S. lost more jobs than forecast in August and the unemployment rate climbed to a five-year high of 6.1 percent, a sign that the economic slowdown is worsening two months before Americans elect their next president.

Payrolls fell by 84,000 in August, and revisions added another 58,000 to job losses for the prior two months, the Labor Department said today in Washington...

Predictably, the report led to renewed talk of recession.

"It certainly increases the probability that we really are in a recession," William Poole, former president of the Federal Reserve Bank of St. Louis, said in an interview with Bloomberg Television. "It is a weak number, including the revisions."...

"We're losing jobs in all kinds of industries now," Roger Kubarych, chief U.S. economist at UniCredit Global Research in New York, said in an interview with Bloomberg Radio. "This is the clearest recessionary signal we've seen."

Markets took note too.

Traders see the Federal Open Market Committee keeping the benchmark target rate for overnight loans between banks at 2 percent through year-end, futures show. The chance of a cut in December is 8 percent, up from zero a week ago, with the probability of an increase at just 2 percent, down from 20 percent a week ago and 43 percent in July.

Some markets, however, turned around later in the day.

Yields on benchmark 10-year Treasuries rose after dropping earlier to a four-month low of 3.55 percent, and were at 3.66 percent as of 4:11 p.m. in New York. The Standard & Poor's 500 Stock Index reversed earlier losses, and was up 0.4 percent to 1,242.31.

Reuters has more on the US stock market performance.

The broader U.S. stock market edged higher on Friday, but still posted its worst week since May, as a rally in financial stocks helped reverse losses sparked by a government report showing the U.S. jobless rate rose to a five-year high.

Financial shares rebounded in afternoon trading, amid hopes the U.S. Treasury would take steps over the weekend to rescue mortgage finance companies Fannie Mae and Freddie Mac. After the closing bell, The Wall Street Journal reported the Treasury is close to finalizing a plan to backstop Fannie and Freddie.

Also helping financials, Lehman Brothers rose 6.8 percent to $16.20 after sources familiar with the situation said Blackstone Group LP and Kohlberg Kravis Roberts & Co KKR.UL are each looking to buy parts of Lehman's real estate and asset management units...

The Dow Jones industrial average rose 32.73 points, or 0.29 percent, to 11,220.96, but ended down 2.8 percent on the week.

The Standard & Poor's 500 Index climbed 5.48 points, or 0.44 percent, to 1,242.31, ending down 3.2 on the week.

The Nasdaq Composite Index, meanwhile, slipped 3.16 points, or 0.14 percent, to 2,255.88, ending the week 4.7 percent lower.

The employment picture did show improvement north of the border, as Canada added 15,200 jobs in August with the unemployment rate remaining steady at 6.1 percent. However, the Ivey Purchasing Managers Index fell to 51.5 in August from 65.5 in July.

Earlier yesterday, there had also been negative news from Japan, where capital spending excluding software fell 7.6 percent in the second quarter.

And over in Europe, the gloomy news continues with Germany reporting that industrial production fell 1.8 percent in July.

1 comment:

Ray said...

There are 5.2 million job openings and 9 million unemployed. Many experts believe that 50,000 online job boards are to blame for fragmenting the job market and making it difficult for employers and job seekers to connect. Here's the 3 newest sites from About.com's top 10 Employment list:

http://www.linkedin.com
http://www.indeed.com
http://www.realmatch.com

Theres a perfect job out there for everyone!

Post a Comment