U.S. private employers added fewer workers to their payrolls in July than expected and hiring in June was much weaker than had been thought, a big blow to an already feeble economic recovery. The dismal news on jobs poses a challenge to officials at the Federal Reserve who are debating whether more needs to be done to foster growth, as well as to Democrats hoping to retain their congressional majorities in November elections. “The labor market improvement has slowed to a glacial pace, consistent with third-quarter growth even slower than the second,” said Nigel Gault, chief U.S. Economist at IHS Global Insight in Lexington Massachusetts. “It doesn’t look like a double-dip, but it looks like very weak growth.” Overall non-farm payrolls fell 131,000 last month, the Labor Department said on Friday, the second straight monthly decline as temporary government jobs to conduct the decennial census dropped by 143,000.
Private employment, a better gauge of labor market health, rose a modest 71,000 after gaining just 31,000 in June. The government revised payrolls for May and June to show 97,000 fewer jobs than previously reported. Financial markets had expected overall employment to fall 65,000 in July, with private-sector hiring increasing 90,000. Prices for safe-haven U.S. government bonds rallied, driving benchmark 10-year Treasury debt yields to a 15-month low, and the dollar tumbled to near a 15-year low against the yen. Given the poor state of the labor market, discouraged workers gave up the search for jobs in droves last month. That kept the jobless rate steady at 9.5 percent since people not looking for work are not counted as being in the labor force.
POLITICS AND THE FED
Job growth has taken a step back after fairly strong gains between February and April, putting in jeopardy the economy’s recovery from its worst downturn since the 1930s. Still, the pace of layoffs has moderated significantly from the first quarter of last year, when employers were culling an average of 752,000 jobs a month. Growing unease over the health of the economy is Continue reading
Japan stocks fall, dollar hits 8-month low vs yen | Reuters 04/08/2010 | 12:50 pm IST
Japanese stocks fell behind their Asian peers and slid 2 percent on Wednesday as the yen climbed towards 15-year highs against the U.S. dollar after weak U.S. data spurred talk of more Federal Reserve easing. Asia-Pacific stocks outside of Japan were slightly off their three-month peaks scaled on Tuesday and are seen prone to profit-taking as investors remain sensitive to any signs of fatigue in the global economy. The latest signs came in the form of disappointing U.S. consumer spending and housing market reports, which fanned speculation the Fed may further relax its loose policy at its Aug. 10 meeting and pushed the dollar to an eight-month low. European shares were set to open lower, with financial spreadbetters expecting Britain’s FTSE 100 to fall about 0.4 percent; Germany’s DAX to fall 0.2 percent and France’s CAC 40 to ease 0.1 percent. Tokyo stocks fell 2.1 percent, hit by fears that a strong yen will erode exporters’ profits and sap economic growth.
Such concerns combined with a run of disappointing U.S. data that cast a pall over recovery in the world’s largest economy, boosted Japanese government bonds, pushing the 10-year yield below 1 percent for the first time in seven years. Japan’s finance minister reiterated that he was closely watching currency moves as the dollar’s weakness tests the tolerance for a stronger yen as the economy struggles to pull out of a crippling spell of deflation. “Today’s stock fall is really all about the yen. At this kind of level, there’s inevitably worries about what sort of impact this will have on company earnings going forward,” said Toshiyuki Kanayama, a market analyst at Monex Inc. Continue reading
Bloomberg News | Jul 17, 2010
The dollar fell the most against the euro in 14 months and dropped to the lowest level this year versus the yen as economic reports added to evidence that the U.S. recovery is losing momentum. The greenback touched a level weaker than $1.30 versus the shared currency as minutes of the Federal Reserve meeting last month indicated policy makers trimmed their forecasts for growth. The euro rallied for a third straight week against the dollar before partial results of stress tests on the region’s banking system due on July 23. “It’s really dollar weakness based on some evidence the economy is slowing,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “The economic indicators are pointing strongly toward slower growth in the second half of the year.”
The dollar declined 2.24 percent, the most since May 2009, to $1.2930 per euro yesterday, from $1.2641 on July 9. It touched $1.3008 yesterday, the weakest level since May 10. The U.S. currency dropped 2.3 percent to 86.57 yen, from 88.62 yen, after reaching 86.27 yesterday, the lowest level since Dec. 1. The euro was little changed at 111.96 yen, compared with 112.01. The euro has rallied 8.9 percent versus the dollar since reaching a four-year low of $1.1877 on June 7 as concern eased that Europe’s sovereign-debt crisis would undermine the region’s economic recovery. Spain, which has the third-largest deficit in the euro region, drew higher demand in its sale of 3 billion euros ($3.8 billion) of 15-year bonds on July 15. It attracted bids worth 2.57 times the securities offered, compared with 1.79 in an April auction.
Stress tests of European banks aren’t likely to force major publicly listed lenders to bolster their capital by selling new shares, according to Goldman Sachs Group Inc. “We do not expect large listed European banks to raise equity as a result of the stress tests,” London-based Goldman Sachs analysts, including Jernej Omahen and Frederik
BBC News | Friday, 18 June 2010 | 14:31 GMT
Barack Obama has warned against cutting national debts too quickly as it would put economic recovery at risk. In a letter to G20 leaders, the US president said that while it was important to put in place "credible plans" to cut deficits, withdrawing economic stimulus early was dangerous. "[In the past] stimulus was too quickly withdrawn and resulted in renewed hardships and recession," he warned. But Mr Obama said the US would still aim to halve its own deficit by 2013. The US budget deficit would be cut to 3% of GDP by 2015, the president said.
The leaders of the world’s 20 leading economies are due to meet in Toronto on 26 June. Mr Obama said the priority of the meeting should be "to safeguard and strengthen the recovery". The BBC World Service’s economics correspondent Andrew Walker said the letter appeared to express the US administrations reservations over recent changes in economic policy in Europe. "There has been a marked change in emphasis in the G20 in the last few weeks," he said. "For many of the group’s member countries, especially in Europe, the case for stimulating economic recovery using the public finances has been overtaken by concerns about stabilising government debt."
Washington Post | Saturday, May 1, 2010
The slow-motion economic recovery has continued in the early months of 2010, according to new data that both affirm that an expansion is solidly in place and underscore that it is likely to remain sluggish. Gross domestic product, the broadest measure of economic activity, rose at a 3.2 percent annual rate in the first three months of the year, the government said Friday. That was the third straight quarter of increase, driven by a rise in spending by American consumers and increased business investment. The stock market fell sharply on Friday, with the ‘Standard & Poor’s’ 500 index down 1.7 percent on the weaker-than-expected GDP report and continuing uncertainty surrounding a potential bailout for Greece.
The details of the GDP report paint a picture of an economic recovery that is well underway and a nation that is unlikely to slide back into recession in 2010. Personal consumption increased at a pace of 3.6 percent, while investment in business equipment and software rose at a 13.4 percent rate. Those gains bode well in that they show both consumers and corporate America starting to loosen their purse strings. "Put together the rise in consumer spending and what is happening on the corporate side, and we’re starting to make the transition from a government-driven expansion to a private-sector recovery," said Robert Dye, senior economist at PNC Financial Services Group. "That’s a very important transition for us to make over the next few months."
Friday’s data showed the limits of that expansion, however, and gave some reasons to be concerned about its sustainability. A rise in business inventories — companies increased the value of goods on their warehouse and store shelves by $31 billion in the quarter — contributed 1.6 percentage points to growth but is likely to
Reuters | Tue Mar 16, 2010 | 7:14pm IST
The US Federal Reserve held benchmark rates near zero on Tuesday and renewed a promise to keep them exceptionally low for an extended period while pointing to increased momentum in the economy’s recovery. The central bank’s nod to a firmer rebound from the deepest recession in decades hints that it is moving closer to dropping its promise to hold borrowing costs at rock bottom levels, suggesting rate hikes could come within several months. For a second consecutive meeting, Kansas City Federal Reserve Bank President Thomas Hoenig dissented, saying the commitment to keep rates exceptionally low for an extended period was no longer warranted. The central bank reiterated that it intends to wrap up purchases of mortgage-related assets by the end of March, but would monitor the economic outlook and financial developments to see if more support is necessary.
The Fed said the labour market was "stabilizing," a view that was more upbeat than at the last meeting in late January, when the policy-setting committee said only that deterioration in the labour market was "abating." The central bank also said business spending on equipment and software had risen "significantly," also a brighter assessment than the one it gave in late January. The Fed has held the benchmark federal funds rate near zero since December 2008 to bolster the economy and help it through the most severe financial crisis in generations. Last March, it committed to holding rates very low for "an extended period." The economy resumed growth in the second half of last year, and expanded at a