Thursday, 7 May 2009

US loses fewer jobs, European services sector improve

Reports on Wednesday continued to show that the recession is easing.

In the US, ADP data indicate that the worst of the recession’s employment losses may have passed. From Bloomberg:

Payrolls fell by an estimated 491,000 workers last month, less than economists forecast and the fewest since October, figures from ADP Employer Services today showed. March’s reading was revised to show a reduction of 708,000 workers, down from a previous estimate of 742,000...

Another report today also reflected a weak labor market. Job cuts announced by U.S. employers rose 47 percent in April from a year earlier to 132,590, led by planned cutbacks at government and non-profit agencies and automotive companies, Chicago-based placement firm Challenger, Gray & Christmas Inc. said.

In the euro area, retail sales fell 4.2 percent from a year earlier in March but the services activity index rose in April, as Bloomberg reports:

Europe’s service industries contracted at the slowest pace in six months in April, suggesting the region’s worst recession since World War II is easing.

A gauge of activity rose to 43.8 from 40.9 in March and a record low of 39.2 in February. That’s better than an initial estimate of 43.1 published on April 23. The index is based on a survey of purchasing managers by Markit Economics and a reading below 50 indicates contraction.

The picture is similar in the UK. From Reuters:

The latest PMI survey by CIPS/Markit showed activity in the services sector, which accounts for three-quarters of the economy, shrank at its slowest pace since last August.

The headline activity index rose to 48.7 in April from 45.5 in March, the biggest one-month rise in a decade, leaving it only a tad below the 50-mark that would indicate growth.

Crucially, new business levels also contracted at a much slower pace and companies were their most upbeat in almost a year about the business outlook.

Mortgage lender Nationwide said consumer morale improved at its fastest pace in two years last month as people sensed the worst of recession may have passed.

And the REC/KPMG report on jobs showed the decline in permanent job placements eased to its slowest in seven months, while wages also fell at a slower pace in April.

Meanwhile, further monetary policy easing will likely help underpin an eventual economic recovery. On Tuesday, Indonesia's central bank cut interest rates, while Wednesday saw central banks from Romania and Norway do the same.

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