Do these lunkheads really know how many people are out of work, I don’t think so, all they know is they still have their jobs, and their steady income, and as long as they have that they don’t care about the American worker.
By Steven C. Johnson Steven C. Johnson – Wed Sept. 2.
Additional reporting by Richard Leong, Gertrude Chavez-Dreyfuss, Ellen Freilich, Ryan Vlastelica and Lynn Adler; Editing by James Dalgleish
NEW YORK (Reuters) – The United States lost fewer private sector jobs …in August than in July while companies planned fewer layoffs, suggesting modest improvement in the beleaguered U.S. labor market.
Tentative signs of recovery were also evident in data that showed U.S. factories saw an increase in new orders in July for the fourth straight month, though the rise was smaller than economists had expected.
Major U.S. stock indexes slipped, though, as economists had expected the data to paint an even brighter picture of the U.S. outlook, while U.S. government bond prices rose.
Wall Street rallied aggressively over the summer on signs that the economy was pulling out of its worst recession in 70 years, but investors have since grown more cautious.
“We’re in the process of turning around, with the economy shifting from contraction to expansion, but the turn is happening slowly,” said Mike Moran, chief economist at Daiwa USA in New York. “It’s not going to be a V-shaped recovery.”
Those clinging to hopes of recovery have latched onto evidence that the rate of job losses is slowing. ADP Employer Services said Wednesday that U.S. private employers cut 298,000 jobs in August, below the 360,000 seen in July.
While that was more than the 250,000 private job losses economists had expected, it still marked a shrinking from the previous month. That left investors hoping to see similar improvement reflected in the government’s more comprehensive jobs report on Friday. In July, it showed the U.S. economy shed 247,000 public and private jobs, and economists polled by Reuters expect losses to have slipped to 225,000 last month.
Between January and March, U.S. employers were cutting an average of 697,000 jobs a month, according to U.S. data.
FED MORE OPTIMISTIC, CONSUMERS STILL LEERY
Minutes from the Federal Reserve‘s most recent policy meeting, released Wednesday, showed that central bank officials think the risk of a relapse for the U.S. economy have been “considerably reduced.”
But the minutes showed the Fed also expects recovery to be slow and was “most likely” to hold benchmark interest rates at very low levels for some time.
That should be good news for U.S. consumers, whose spending is the main engine that powers the economy. Consumer confidence has flagged over the last year and spending has decreased.
A weak job market and plunging home prices have been key reasons for the pullback. Consultancy firm Challenger, Gray & Christmas, Inc said Wednesday that planned layoffs at U.S. firms fell 21 percent in August, boosting some hopes that consumers will take out their wallets again this autumn.
Still, the cumulative number of job cuts since January hit 1.07 million, 60 percent higher than in the same eight-month period last year.
Also, a report on Wednesday showed bankruptcy filings by American consumers rose 24 percent in August compared with a year earlier and could reach 1.4 million by the end of 2009.
“Households are very cautious, and while I think it will be better in the coming months than in the past year, there is not going to be a sudden boom in consumer spending,” Moran said.
Win Thin, a currency strategist at Brown Brothers Harriman in New York, agreed, adding, “I would say the trend is improving but the bottom line is that the U.S. economy is still bleeding jobs.”
FACTORY ORDERS EDGE UP
The U.S. manufacturing sector, while much smaller than the consumer-driven services sector, has been showing steady signs of improvement.
Data this week showed the sector grew for the first time in 19 months in August, and a report Wednesday showed new orders at U.S. factories rose 1.3 percent in July.
But economists polled by Reuters were hoping for a 2.2 percent increase. Excluding transport equipment, orders fell 0.7 percent.
But Pierre Ellis, senior economist at Decision Economics in New York, said a sharp decline in petroleum prices in July contained new orders growth, adding “the ongoing, very gradual improvement in demand for manufactured goods continues.”
Mortgage applications slid last week even as rates fell, with requests for loans to buy homes slipping for the first time since early July, according to an industry group.
Fixed 30-year mortgage rates averaged 5.15 percent last week, above the 4.61 percent record low set in March. But a year ago, this borrowing cost was 6.39 percent.
House prices plunged over the past three years, marking the market’s worst crash since the Great Depression, but the view that the worst is over is gaining traction.