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Home arrow News and Articles arrow U.S. Jobs Lost Worse than Expected, Unemployment Rate rises to 9.8%...
U.S. Jobs Lost Worse than Expected, Unemployment Rate rises to 9.8%... Print E-mail

A few months ago, I seem to be the "lone" voice saying the possibility of a "W" shape economic recovery. In recent months, most analysts have turned from Bearish to Bullish, and think that the global economy will recover in a "V" shape (fast) recovery...

 

However, the latest Job Loss data from U.S. clearly shows that the economic fundamentals of U.S. is not showing much improvement, and that the chancce of a  W shape economic recovery has risen. In recent weeks, even Mr Tharman (Singapore's Finance Minister) and BG Lee Hsien Loong (Singapore's Prime Minister) also warned the possibility of a "W" shape economic recovery.

 

Regards.

 

Dennis Ng, http://www.MasterYourFinance.com

 

WASHINGTON (Reuters) - U.S. employers cut a deeper-than-expected 263,000 jobs in September, lifting the unemployment rate to 9.8 percent, according to a government report on Friday that fueled fears the weak labor market could undermine recovery from a prolonged recession.

 

The Labor Department said the unemployment rate was the highest since June 1983 and payrolls had now dropped for 21 consecutive months.

 

Analysts polled by Reuters had expected non-farm payrolls to drop 180,000 in September and the unemployment rate to rise to 9.8 percent from 9.7 percent the prior month. The poll was conducted before reports, including regional manufacturing surveys, showed some deterioration in employment measures.

 

However, analysts said the bigger-than-forecast fall in payrolls was not the start of a reversal in the trend toward a moderation in the pace of job losses and some even suggested September's reading might have been distorted by a sharp drop in government employment.

 

"The worst of the labor market deterioration is over. Despite this month's bigger decline, the trajectory of job losses is still positive as the trend rate has slowed as economic activity has begun to recover," said Steven Wood, chief economist at Insight Economics in Danville, California.

 

Stock futures dropped sharply on the news. Shares had already slipped this week as other data pointed to a leveling-off in the nascent U.S. recovery from a recession which began in December 2007.

 

U.S. Treasury prices rallied initially but then gave up those gains. Bond market investors are wary after a recent rally in U.S. government debt -- considered a safe investment in times of weak economic growth -- that has brought the benchmark 10-year note to its lowest yield since May. Bond prices move inversely to yields.

 

Commodities prices -- which have run higher in anticipation of a rebound in demand -- also fell and crude oil futures were down 3 percent on the day.

 

The government revised job losses for July and August to show 13,000 more jobs were lost than previously reported.

 

Stubbornly high unemployment is viewed as the missing link in recovery from the worst recession in 70 years. The economy is believed to have started growing in the third quarter.

 

Since the start of the recession, the number of unemployed people has soared 7.6 million to 15.1 million, the department said. While the pace of job losses has moderated from early this year, companies are still not hiring on a big scale, likely waiting for a signal that the recovery is sustainable.

 

"We're probably still on track for recovery, but it's going to take time to unfold," said Gary Thayer, strategist at Wells Fargo Advisors in St. Louis, Missouri.

 

"The job losses were fairly widespread. The trend is still improved from earlier this year, but employers need to feel more confident about the economy before they start hiring again."

 

Manufacturing employment fell by 51,000 in September, while construction industries payrolls dropped 64,000. The service-providing sector cut 147,000 workers in September, while goods-producing industries shed 116,000 positions.

 

Education and health services added a mere 3,000 jobs, while government employment fell 53,000.

 

Even more worrying, the average workweek, which closely correlates with overall output and gives clues on when firms will start hiring, dipped to 33 hours from 33.1 in August.

 
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