Monday 23 October 2017

US employment falls at twice rate predicted by economists

Brendan Keenan

Brendan Keenan

EMPLOYMENT in the US fell by more than 130,000 last month, as weak private hiring failed to match job losses in the government sector.

The figure was around double the estimate of economists.

Stock markets tumbled after the news, with the S&P 500 Index down 1.3pc and the Stoxx Europe 600 falling 1.1pc.

The yield demanded by buyers of two-year US government bonds fell below half a per cent for the first time as investors discounted any Federal Reserve increase in the foreseeable future and speculated on further easing at the Fed meeting next week.

Official figures showed US unemployment steady at 9.5pc as more people gave up looking for work.

If those who say they are partly searching for jobs are included, US unemployment is more than 16pc.

"To the extent that we have a labour market recovery, it's a slow one," Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts, said. "I don't see anything to indicate that the third quarter will be better."

Private companies hired 71,000 people last month, compared with an average forecast of 90,000.

Revised figures lowered the June increase to 31,000. Government employment fell by 202,000, partly due to temporary census workers finishing off.

The strongest showing was in manufacturing, where payrolls surged by 36,000 in July -- almost three times the median forecast in a survey of economists.

The weakness in the US labour market does not mean the economy is sliding back into a recession and may instead reflect productivity gains, said Stanford University economist Robert Hall, who heads the National Bureau of Economic Research's business-cycle dating committee, which marks the start and end of recessions.

The committee said in April that it was too soon to declare the recession that began in December 2007 over, though some members have said the contraction has probably ended.

Harvard University economist James Stock said there are indications that more jobs may be coming soon.

"Firms deferred investment for a long time and that is consistent with the capital expenditure boom," Stock said.

"By the same token, average weekly hours are now almost at pre-recession levels, which is another indication that employment should be picking up in the near future."

Other figures yesterday showed UK manufacturing output increasing for a second month in June.

A second 0.3pc monthly rise produced the best calendar quarter for factory production in more than a decade.

Reduced

Overall industrial production fell, but this was put down to earlier-than-usual maintenance of oil and gas fields, which reduced production.

However, industrial production in Germany unexpectedly declined, led by a drop in investment goods such as machinery and trucks.

(Additional reporting by Bloomberg)

Irish Independent

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