JohnnyMarzetti
06-06-2005, 09:48 AM
The US economy generated just 78,000 jobs in May, fewer than half the number expected, rekindling fears that the anaemic labour market may start to slow economic growth.
The figure also heightened speculation that the Federal Reserve might call an end to monetary tightening sooner than previously thought.
The weakness of the labour market has been one of the biggest concerns for economists since the US emerged from recession at the end of 2001. But many analysts believed employers had finally cast aside their reluctance to hire after they added 274,000 to the payroll in April.
Friday's figures suggested that the labour market was once again faltering. The yield on the 10-year bond slid 9 basis points on the news to 3.8 per cent its lowest yield this year although bonds later gave up some of their gains, partly on profit-taking.
“Financial markets are betting that weak employment growth is going to act as a drag on the economy,” said Ian Morris, an economist at HSBC. “If we don't get stronger job increases than this, it is hard to see how consumers can sustain current rates of spending growth.”
The news on jobs capped a week of disappointing economic data and falling bond yields. Figures earlier in the week suggested that the manufacturing sector was growing at its slowest rate in nearly 2 years.
There was also further evidence that inflationary pressures remain more muted than previously thought. The Institute for Supply Management's manufacturing index pointed to a sharp slowdown in the rise of prices paid for raw materials in May. In addition, bond yields were depressed by hints from Richard Fisher, president of the Federal Reserve of Dallas, that an end to monetary tightening was now in sight.
“There is a growing sense that after a rate rise in June, the Fed will become more willing to think of truncating the tightening cycle if the data remains lacklustre,” said Alan Ruskin, director of research at 4Cast, the consultancy.
The silver lining to the report was provided by a fall in the unemployment rate from 5.2 to 5.1 per cent its lowest rate since September 2001.
The rise in hourly earnings was also disappointing, with an advance of just 0.2 per cent on the month and 2.6 per cent over the year. This index which captures about 80 per cent of the work force but excludes managers and professionals suggests that hourly wages are still lagging inflation, which came in at 3.5 in April.
“Slack job growth appears to be making it hard for employees to wring decent pay rises out of companies,” said Jared Bernstein, an analyst at the Economic Policy Institute, a Washington-based think tank. “Job growth has been coming in fits and starts, enough to sustain a recovery but not enough to really start to lift living standards for the bulk of workers.”
May was another disappointing month for the manufacturing sector which has shed around 2.8m jobs since January 2001. In May employment declined by another 7,000 the seventh fall in the past eight months.
The service sector added just 64,000 jobs after 232,000 in April.
--So it looks like even fast food is reaching its saturation point.
I also saw a story this morning that GM may be approaching bankruptcy. The reason, they said, is that their pension funds, which have been promised in their contracts, are costing them too much mainly because of health care costs.
So, they can use bankruptcy to avoid paying what they promised people, but individuals can't anymore.
The main point though, is that if GM does this, it's going to have a rippling effect throughout our economy.
Damn it people!! You all bought Dubya's BS and now you and your children are going to have to live with it!!
The figure also heightened speculation that the Federal Reserve might call an end to monetary tightening sooner than previously thought.
The weakness of the labour market has been one of the biggest concerns for economists since the US emerged from recession at the end of 2001. But many analysts believed employers had finally cast aside their reluctance to hire after they added 274,000 to the payroll in April.
Friday's figures suggested that the labour market was once again faltering. The yield on the 10-year bond slid 9 basis points on the news to 3.8 per cent its lowest yield this year although bonds later gave up some of their gains, partly on profit-taking.
“Financial markets are betting that weak employment growth is going to act as a drag on the economy,” said Ian Morris, an economist at HSBC. “If we don't get stronger job increases than this, it is hard to see how consumers can sustain current rates of spending growth.”
The news on jobs capped a week of disappointing economic data and falling bond yields. Figures earlier in the week suggested that the manufacturing sector was growing at its slowest rate in nearly 2 years.
There was also further evidence that inflationary pressures remain more muted than previously thought. The Institute for Supply Management's manufacturing index pointed to a sharp slowdown in the rise of prices paid for raw materials in May. In addition, bond yields were depressed by hints from Richard Fisher, president of the Federal Reserve of Dallas, that an end to monetary tightening was now in sight.
“There is a growing sense that after a rate rise in June, the Fed will become more willing to think of truncating the tightening cycle if the data remains lacklustre,” said Alan Ruskin, director of research at 4Cast, the consultancy.
The silver lining to the report was provided by a fall in the unemployment rate from 5.2 to 5.1 per cent its lowest rate since September 2001.
The rise in hourly earnings was also disappointing, with an advance of just 0.2 per cent on the month and 2.6 per cent over the year. This index which captures about 80 per cent of the work force but excludes managers and professionals suggests that hourly wages are still lagging inflation, which came in at 3.5 in April.
“Slack job growth appears to be making it hard for employees to wring decent pay rises out of companies,” said Jared Bernstein, an analyst at the Economic Policy Institute, a Washington-based think tank. “Job growth has been coming in fits and starts, enough to sustain a recovery but not enough to really start to lift living standards for the bulk of workers.”
May was another disappointing month for the manufacturing sector which has shed around 2.8m jobs since January 2001. In May employment declined by another 7,000 the seventh fall in the past eight months.
The service sector added just 64,000 jobs after 232,000 in April.
--So it looks like even fast food is reaching its saturation point.
I also saw a story this morning that GM may be approaching bankruptcy. The reason, they said, is that their pension funds, which have been promised in their contracts, are costing them too much mainly because of health care costs.
So, they can use bankruptcy to avoid paying what they promised people, but individuals can't anymore.
The main point though, is that if GM does this, it's going to have a rippling effect throughout our economy.
Damn it people!! You all bought Dubya's BS and now you and your children are going to have to live with it!!