Markets slump on surprisingly poor US jobless figures
Published 09/07/2011 | 05:00
MARKETS were hurt yesterday after worse-than-expected employment figures from the US. American employers added jobs at the slowest pace in nine months in June. US unemployment climbed to 9.2pc, the highest so far this year, sending global stocks tumbling.
New jobs grew by just 18,000 workers last month, less than the most pessimistic forecast in a Bloomberg News survey of economists, which predicted growth of 105,000. Hiring by companies was the weakest since May 2010.
"This is a very fragile state for the US labour market," said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston.
"It suggests that the overall recovery remains somewhat tenuous."
President Barack Obama said the report showed that "we still have a long way to go and a lot of work to do to give people the security and opportunity they deserve".
However, leading investor Warren Buffett said he does not expect a second recession.
"I would bet very heavily against that," Mr Buffett told Bloomberg Television. "I see nothing that indicates any kind of a double dip."
The unemployment rate unexpectedly climbed to 9.2pc in June, the highest level this year, and hiring by companies was the weakest since May 2010, US Labour Department data showed.
US employers added 18,000 jobs last month, less than the 105,000 median estimate in a Bloomberg News survey.
"It means that we're still a ways off from getting to where we should be," Mr Buffett added.
He said unemployment in the US would fall when house building kicked off again.
The worse-than-expected employment figure prompted stocks to slump in the US and beyond.
The Standard & Poor's 500 Index slumped 1.2pc to 1,337.34 by lunchtime yesterday in New York. The yield on the benchmark 10-year note dropped to 3.02pc from 3.14pc late yesterday.
The jobs figures add to pressure on the US to hammer out a deal on its own looming debt crisis and representatives from the two main political parties are due to meet for talks on cutting deficits.
If talks fail it could lead to a technical default for the US government, with potentially dire consequences for global confidence. (Bloomberg)