Showing posts with label resilience. Show all posts
Showing posts with label resilience. Show all posts
Wednesday, October 23, 2013
Friday, June 7, 2013
Hiring points to resilience in economy
Traders stand outside the New York Stock Exchange prior to the opening bell October 31, 2012.
Credit: Reuters/Brendan McDermid
WASHINGTON |
WASHINGTON (Reuters) – U.S. employers likely stepped up hiring only slightly in May, a sign the economy was growing modestly but not strongly enough to convince the Federal Reserve to scale back the amount of cash it is pumping into the banking system.
The United States probably added 170,000 jobs last month, with the unemployment rate holding steady at a lofty 7.5 percent, according to a Reuters survey of economists.
Following a winter in which the economy seemed to be turning a corner, May would be the third straight month that payrolls outside the farm sector increased by less than 200,000.
“The labor market may not be as strong as we thought,” said Kevin Cummins, an economist at UBS in Stamford, Connecticut.
The Labor Department will release the May employment report on Friday at 8:30 a.m. EDT.
The report could heighten concerns government austerity enacted this year is sapping vigor from the economy, and might dampen speculation the Fed might soon trim bond purchases aimed at lowering interest rates and boosting employment.
Officials at the U.S. central bank have intimated they could be close to tapering bond purchases despite modest economic growth which is not expected to pick up until late in the year when the sting from government spending cuts begins to fade.
Budget cuts have led to hiring freezes at many government agencies, and attrition could be slowly reducing payrolls. Government payrolls are expected to decline by 10,000 in May.
LASTING DAMAGE
About 4.4 million Americans have been unemployed for more than six months, roughly three million more than pre-recession levels. The longer workers are out of a job, the greater the risk they become essentially unemployable. That could deal lasting damage to the economy and has lent urgency to the Fed’s efforts to stimulate growth.
Still, May’s expected pace of job growth is right around the average for the 12 months through April. Over that period the jobless rate fell about half a percentage point and the ranks of the long-term unemployed declined by nearly 700,000.
“It’s progress that’s too slow, but it’s progress nonetheless,” said Guy Berger, an economist at RBS, also in Stamford.
Fed officials next meet June 18-19 and are widely expected to keep purchasing $ 85 billion in bonds a month. Many economists don’t expect the job market to be strong enough for the Fed to begin scaling back its bond purchases before December.
After barely growing in the last three months of 2012, the U.S. economy expanded at a moderate 2.4 percent annual rate in the first quarter but lost momentum as the quarter drew to a close. Most economists look for growth of around 1.5 percent in the current quarter.
U.S. factories are feeling the pinch from Europe’s debt crisis, which has sent a chill over the global economy. The Institute for Supply Management said on Tuesday that U.S. manufacturing activity contracted in May. Manufacturing employment is seen rising by a meager 3,000 jobs last month.
The report is expected to show the length of the average workweek edged higher to 34.5 hours, which could signal demand is strong enough to trigger faster hiring in coming months. Average hourly earnings are seen rising 0.2 percent.
Another indicator of labor market health will come in the share of the population that is either employed or looking for work. Some of the recent drop in the jobless rate has been due to workers leaving the labor force, either because they retired, went back to school or gave up looking for a job.
The labor force participation rate was 63.3 percent in April, holding at a 34-year low for the second straight month. A stabilization of this indicator could point to more healing in the labor market.
(Reporting by Jason Lange Editing by Tim Ahmann and James Dalgleish)
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Hiring points to resilience in economy
Saturday, May 25, 2013
Durable goods orders point to factory resilience
Washers and dryers are seen on display at a store in New York July 28, 2010.
Credit: Reuters/Shannon Stapleton
WASHINGTON |
WASHINGTON (Reuters) – Orders for long-lasting U.S. manufactured goods rose more than expected in April, a hopeful sign that a sharp slowdown in factory output could soon run its course.
New orders for durable goods, which range from toasters to aircraft, increased 3.3 percent last month, the Commerce Department said on Friday.
The data was the latest to show the U.S. economy exhibiting surprising resilience in the face of harsh fiscal austerity measures enacted this year.
“(It’s) another sign that growth is holding up quite well,” said Paul Ashworth, an economist at Capital Economics in Toronto.
While Washington hiked taxes in January and sweeping budget cuts began in March, consumer spending has looked relatively robust and many economists think the U.S. Federal Reserve could begin tapering a monetary stimulus program by the end of the year.
Economists polled by Reuters had expected new orders for durable goods, which are meant to last three years or more, to rise 1.5 percent last month. The Commerce Department also revised prior readings for orders to show a smaller decline in March than previously estimated.
The better-than-expected news helped contain losses on Wall Street, where stocks slipped for a third straight day. Investors fear that less monetary stimulus could crimp the supply of money for investing. Yields on U.S. government debt also declined.
NOT RIP-ROARING
Data earlier this month showed U.S. factory output fell in April for the second straight month, hurt by the European debt crisis which has weighed on demand at factories from Los Angeles to Shanghai.
Friday’s report showed a measure of underlying demand in the factory sector, which strips out aircraft and military goods and is an indicator of future business spending, advanced 1.2 percent. That was a faster clip than analysts had expected.
Even if that signals a return to growth in the factory sector, economists expect government austerity will nevertheless sap strength from the economy as the year progresses.
“While (Friday’s data) was definitely better than expected, I would not mistake this for rip-roaring strength,” said Stephen Stanley, an economist at Pierpont Securities in Stamford, Connecticut.
Shipments of core capital goods, which go into calculations of equipment and software spending in the gross domestic product report, fell 1.5 percent.
That suggests that while there were signs businesses could spend more in coming months, actual transactions got off to a weak start in the second quarter, reinforcing the view that economic growth has slowed.
Economists polled by Reuters earlier this month expect GDP to grow at a 1.5 percent annual rate in the second quarter, down from a 2.5 percent pace in the January-March period.
Shipments of capital goods in the defense sector, which is shouldering a large share of Washington’s austerity drive, fell 5.6 percent in April.
And while the strength in overall new orders was broad based, it received a boost from a rise in demand for aircraft, which is often volatile. The increase in aircraft orders was expected; plane-maker Boeing received orders for 51 aircraft, up from 39 in March, according to information posted on its website.
(Editing by Andrea Ricci)
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Durable goods orders point to factory resilience
Saturday, May 4, 2013
Job market resilience eases growth concerns
People wait in line to meet a job recruiter at the UJA-Federation Connect to Care job fair in New York March 6, 2013.
Credit: Reuters/Shannon Stapleton
WASHINGTON |
WASHINGTON (Reuters) – Employment rose at a faster pace than expected in April and hiring was much stronger than previously thought in the prior two months, a sign of resilience that should help the economy absorb the blow from belt-tightening in Washington.
Nonfarm payrolls rose by 165,000 jobs last month and the unemployment rate fell to 7.5 percent, the lowest level since December 2008, the Labor Department said on Friday. The job counts for February and March were revised up by a net 114,000.
“This bolsters the case that the U.S. economy will be able to survive the combined headwinds of sequestration and a deepening recession in Europe,” said Scott Anderson, chief economist at Bank of the West in San Francisco.
Investors on Wall Street cheered the data, which beat economists’ expectations for a 145,000 jobs gain and a steady 7.6 percent reading on the unemployment rate.
U.S. stocks rallied, with the Standard & Poor’s 500 index and the Dow Jones industrial average closing at record highs. The dollar vaulted to a one-week high against the yen, while Treasury debt prices tumbled.
Payrolls rose by 138,000 jobs in March, 50,000 more than previously reported, and job growth for February was revised up by 64,000 to 332,000, the largest increase since May 2010.
But the gains last month were far below the 206,000 jobs per month average of the first quarter, the latest evidence the economy is cooling, even if not as quickly as earlier feared.
Indeed, the data provided a number of signs of a loss of momentum.
Construction employment fell for the first time since May and manufacturing payrolls were flat. The length of the average workweek pulled off a nine-month high and a gauge of the overall work effort fell.
Economists pin the slowdown largely on higher taxes that took hold at the start of the year and $ 85 billion in federal government spending cuts, known as the sequester, that went into effect at the beginning of March. Economies overseas have also weakened, cutting into U.S. export growth.
While the U.S. economy grew at a 2.5 percent annual pace in the first quarter, data on construction spending, retail sales and trade suggested it ended the period with less speed.
Further, factory data for April imply the economy braked further at the start of the second quarter, a thesis supported by a report on Friday that showed the pace of growth in the services sector in April was the slowest in nine months.
“We are probably going into a second-quarter soft patch, but it’s not something that’s going to derail the recovery,” said Julia Coronado, chief North American economist at BNP Paribas in New York.
FED STILL IN PLAY
The 0.1 percentage point drop in the jobless rate reflected a gain in employment, rather than people leaving the workforce.
Indeed, more Americans entered the workforce than in any month since October. The labor force participation rate – the share of working-age Americans who have a job or are looking for one – held steady at a 34-year low of 63.3 percent.
While the pace of hiring was stronger than expected in April, it remained below the roughly 300,000 jobs a month that economists say are needed over a sustained period to put a significant dent in unemployment.
While the jobless rate has dropped 0.4 percentage point since January, employment is still 2.57 million jobs below where it stood in December 2007. At April’s job growth pace, it would take about 16 months to make up that lost ground.
About 21.9 million people are either unemployed, working only part-time although wanting full-time work, or want a job but have given up the search.
Economists said the data did not appear strong enough to dissuade officials at the Federal Reserve from pressing forward with their bond-buying stimulus, given the immense slack still in the labor market. It did, however, dampen budding speculation the U.S. central bank might step up its purchases.
“It probably cools any expectations that the Fed is going to increase the asset purchases, especially with the unemployment rate declining,” said Raymond Stone, chief economist at Stone & McCarthy Research Associates in Princeton, New Jersey.
A Reuters survey of economists at financial institutions that deal directly with the Fed found 11 of these so-called primary dealers expect the U.S. central bank to continue asset purchases into 2014, while just four saw the program ending this year.
GOVERNMENT JOB CUTS WEIGH
All the job gains last month were in the private sector, which added 176,000 new positions. Gains were led by a rebound in retail employment, which had dropped in March after eight straight months of increases. Retail payrolls rose 29,300.
Temporary help, a harbinger of future hiring, increased by the most since February. It has now risen for seven straight months.
“That tells me payroll growth is going to continue to be on a decent pace,” said Stone.
In a surprise, the construction sector shed 6,000 workers after 10 straight months of gains. Increases in residential construction were offset by declines in jobs for nonresidential builders and other construction workers.
Government payrolls dropped 11,000 after falling 16,000 in March. Most of the job losses last month came from the federal government, with big declines at the U.S. Postal Service, which is downsizing.
Average hourly earnings rose 0.2 percent. But with average hours worked by private workers slipping to 34.4 hours from 34.6 hours, weekly earnings actually fell.
“The decline in income coupled with a low saving rate does not bode well for consumers,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch in New York.
(Reporting by Lucia Mutikani; Editing by Tim Ahmann, Neil Stempleman and Dan Grebler)
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Job market resilience eases growth concerns
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