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US jobs report to offer turnaround clues
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nickyng
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05-Feb-2010 16:02
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WASHINGTON: Much-awaited data on US jobs may offer clues Friday on whether
the troubled American labour market, and the overall economy, is on the mend.
The Labor Department's nonfarm payrolls report is expected to show a gain of 15,000 jobs in January, based on the consensus forecast of analysts. If the figure is positive, it would be only the second gain in over two years, after November's modest increase of 4,000 jobs. A rise in job creation is seen as the critical ingredient to sustaining economic growth following the brutal recession, although economists said the US needs to add 100,000 jobs or more each month just to keep up with new labour market entrants. Even with a rise in jobs, the unemployment rate may not come down from the high level of 10 per cent due to growth in the labour force, analysts said. Economist Dean Maki at Barclays Capital said he expected the report to show a gain of 25,000 jobs after the December decline in payrolls of 85,000, and that the labour market is gaining momentum. "We believe the risks to our forecast for nonfarm payrolls are tilted to the upside," he said. Maki added that he expects gains in construction and in government as it begins to add workers for the 2010 census. "The hiring should accelerate over the next several months, peaking in May and potentially translating to over a 700,000 gain in nonfarm payrolls in the month," he said. Offering a divergent view, Andrew Tilton at Goldman Sachs said he anticipates a drop in payrolls of 25,000 and a rise in the jobless rate to 10.1 per cent. Tilton said the trend is improving but that Friday's report may be hurt by special factors "that may obscure the underlying trend," including cold weather and revised 2009 employment figures that may skew the picture. Markets were roiled by data Thursday showing new jobless claims rose to 480,000 in the week ending January 30, up 8,000 from the prior week's upwardly revised 472,000. The reading was worse than the consensus forecast of 455,000 new claims and dampened hopes for a positive reading. "We are disturbed by the run of recent claims numbers," said Ian Shepherdson at High Frequency Economics. "It is starting to look as though the downward trend in claims, which has been key to the story of payroll gains in the next few months, has stalled." David Rosenberg at Gluskin Sheff & Associates noted that "there are still considerable hurdles in the way of sustained job creation." Economic data is still tepid and the recovery mainly owes to government spending and ultra-low interest rates, he explained. "The number of cities with double-digit unemployment increased to 138 from 125; 19 had jobless rates topping 15 per cent. This is what has the economics community excited about a recovery?" Rosenberg said. A survey by payrolls firm ADP showed nonfarm private jobs decreased 22,000 in January from a month earlier, a better than expected figure. "The labour market is inching in the right direction, but the economy is still not generating jobs in numbers that will stabilize the unemployment rate," said Ryan Sweet, a senior economist with Moody's Economy.com. President Barack Obama is pouring immense resources to haul the economy out of double-digit unemployment that could wreck recovery from a deep recession. His 3.8-trillion-dollar government budget plan for the 2011 fiscal year starting October 1 calls for an additional US$100 billion to reduce joblessness and boost overall economic activity. - AFP/sc |
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