US job figures ease fears of double-dip recession
Markets take heart as companies hire more workers than expected
Published 04/09/2010 | 05:00
Companies in the US added more jobs than forecast in August, easing concern the world's largest economy is sliding back into a recession.
Private payrolls climbed 67,000 after a revised 107,000 increase in July that was more than initially estimated, Labour Department figures in Washington showed yesterday.
The unemployment rate rose to 9.6pc as more people looked for work. A separate report showed service industries expanded more slowly than estimated.
Stocks climbed around the world and US Treasuries slumped as the employment report bolstered Fed chairman Ben Bernanke's view that the conditions are in place for a pick-up in growth in 2011.
While companies such as Caterpillar are boosting staff as the global economy recovers, payrolls are expanding too slowly to bring down an unemployment rate hovering near a 26-year high.
"The worst fears were not realised, but it's still not good enough," said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Connecticut.
His forecast for a 60,000 increase in private payrolls was among the most accurate in a Bloomberg News survey of economists.
The median forecast called for an increase of 40,000. The Standard & Poor's 500 Stock Index rose 0.8pc to 1098.53 in New York.
The MSCI World Index of stocks in 24 developed markets added 0.8pc. Ten-year Treasury yields climbed to 2.71pc from 2.63pc late yesterday.
"The double-dip talk was probably misplaced," according to Maury Harris, chief economist at UBS Securities in New York.
"From a historical perspective, things are still soft. The economy ought to be doing better."
Yesterday's data, together with another report last week showing manufacturing expanded faster than forecast in August, reduces the odds that the Federal Open Market Committee will ease policy at its next meeting on September 21, economists said.
"There is less reason to be concerned about the trajectory of the economy in the very near term, but labour market trends remain weaker than the Fed is willing to tolerate in the long run," said Louis Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey. "Continued stagnation will exhaust the Fed's patience at some point."
US President Barack Obama said there was "no quick fix" for the economy, meanwhile, and promised to lay out new ideas next week to boost growth and get firms hiring.
The president, speaking at the White House, urged Congress to pass measures to help small businesses, including tax breaks and aid to ease credit.
"I will be addressing a broader package of new ideas next week," he said. The economy is moving in "the right direction; we just have to speed it up".
The White House is considering payroll tax relief to encourage new hiring, a permanent extension of the research and development tax credit and other business tax breaks as well as more infrastructure spending, according to people familiar with the discussions. (Bloomberg)