Shock US job figures threaten recovery hopes

American companies added just 18,000 jobs in June, the US labour department said, well below forecasts of 90,000 to 120,000 US employers hired the fewest workers in nearly two years last month, pushing up the jobless rate and rattling financial markets. Crushing hopes of a turnaround in the jobs market, companies became increasingly cautious about hiring new staff amid the continuing economic uncertainty and added just 18,000 jobs in June, the US labour department said, well below the consensus forecast of 90,000 to 120,000, and the weakest reading since September 2010. The shock figures pushed the US unemployment rate up from 9.1% to 9.2% – the highest level since December 2010, when it stood at 9.4%. The FTSE 100, which was up about 27 points before the release of the June payroll figures, dropped more than 55 points to 5998.81 as investors fretted about the global impact of a slowdown in the world’s biggest economy. The private sector added just 57,000 jobs last month – against expectations of 110,000 – while the government shed 39,000. Rob Carnell, of ING Bank, described the figures as “absolutely awful” and said they would “rock” the markets. Markets analyst Louise Cooper said: “There was a collective gasp on the trading floor here at BGC when the non-farm payrolls number was released. Even given that this data is volatile and subject to large revisions, this number is worrying. “America is the country that creates jobs – flexible employment laws are supposed to ensure that in an economic recovery, people are re-employed quickly and easily. Eighteen thousands jobs created in a country of 400 million people with a 9.2% unemployment rate means that more needs to be done. But what? “[Regarding] monetary policy – the federal funds target rate is already at 0.25% – [there is] no room to cut there and QE2 [the second round of quantitative easing] finished last week. [With] $14tn debt and the deadline for the budget deal on 2 August, fiscal policy is tightening. Most economists are expecting a rebound to the US economy in the second half of the year [and] this number will cause them to return to their models.” The labour department also revised May’s disappointing job creation figures down further, saying companies added just 25,000 jobs in the month – less than half its previous estimate of 54,000. The job figures for April were also revised downwards, though far more moderately, to 217,000 from the previous estimate of 221,000. The figures are particularly disappointing after strong job creation figures on Thursday prompted many analysts to raise their forecast for Friday’s figures, from a consensus of 90,000 to 120,000. Those figures, from American payroll processor ADP, said that the private sector added 157,000 jobs last month – more than double the number expected and dwarfing the 36,000 jobs added in May. US unemployment and employment data US economy United States Global economy Tom Bawden guardian.co.uk

Posted by on July 8, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.