Pan-African News Wire editor Abayomi Azikiwe covering the National March for Jobs in Pittsburgh on September 20, 2009. The march kicked off the protests surrounding the G20 summit. (Photo: Alan Pollock)
Originally uploaded by Pan-African News Wire File Photos
By Alan Rappeport in New York
October 2 2009 13:50
Financial Times
The US unemployment rate climbed to a fresh 26-year high of 9.8 per cent in September, as the pain of recession continues to linger on the shoulders of American workers in spite of aggressive measures to stimulate the economy.
Official figures on Friday showed that non-farm payrolls dropped by 263,000, making it the 21st consecutive month that the US economy has shed jobs. The data were worse than even the most grim expectations, as economists predicted a 175,000 drop in payrolls, and followed a decline of a revised 201,000 jobs in August.
US stocks were set to plunge after the report. S&P 500 futures were 11.9 points lower at 1,015.50, trading below fair value. Futures for the Dow Jones Industrial Average fell 100 points to 9,618. Nasdaq futures were down 15 points at 1,655.50, also trading below the fair value reading.
The dollar advanced as investors flocked to safe havens, while oil prices fell and gold dipped below the $1,000 mark
The US unemployment rate has more than doubled in the past two years and the number of people without jobs has risen by 7.6m to 15.1m since the recession began in December 2007.
Few industries were spared job losses last month, with construction, manufacturing, retail and government agencies culling the highest numbers of workers. Only the education and healthcare sectors added jobs in September.
Hourly earnings ticked up by a penny to $18.67, but the average work week, a closely watched measure that signals future hiring, slid back to 33 hours. This remains close to a record low and economists suggest that an expansion in working hours will have to come before new hiring begins.
“Hourly earnings are soft reinforcing a view that the short term problem is disinflation not inflation, and does not support a consumer spending rebound,” said Alan Ruskin, a strategist at RBS Greenwich Capital.
The labour department figures come as analysts project that the US economy grew at an adjusted annual rate of 3 per cent in the just completed third quarter. Fears abound, however, over a “jobless recovery”, where companies that have become acclimated to operating with fewer workers are slow to begin rehiring and where employment lags the rest of the economy.
Ben Bernanke, chairman of the Federal Reserve, said on Thursday that even if the economy expands at a rate of 3 per cent, that will not be enough to chip away at the unemployment rate, which is expected to rise above 10 per cent before falling back next year.
Mr Bernanke has pointed rising levels of long-term unemployment, of six months or more, as another looming risk to the labour force, as workers begin to see their skills erode. In September, 5.4m Americans had been unemployed for more than six months, representing 35.6 per cent of those who were unemployed.
Other indicators have added to the argument that unemployment will remain stubbornly high. New jobless claims have been mounting at a clip of around 500,000 a week, the rebound in manufacturing activity appears to be sputtering and the latest Conference Board survey found that more people feel like jobs are hard to get.
When the labour market does begin to rebound, the recovery will likely be uneven, as several US states are experiencing more employment pain than others. According to the labour department, unemployment rates in 14 states have already breached the 10 per cent mark.
Additional reporting by Samantha Pearson
US stock futures sink on jobs report
By Samantha Pearson in New York
October 2 2009 14:04
Financial Times
US stocks were set to sink lower on Friday after disappointing data on jobs raised concerns about the pace of economic recovery and a possible correction on Wall Street.
S&P 500 futures were 11.9 points lower at 1,015.50, trading below fair value. Futures for the Dow Jones Industrial Average fell 100 points to 9,618.
Nasdaq futures were down 15 points at 1,655.50, also trading below the fair value reading.
September’s non-farm payrolls report showed the loss of 263,000 jobs, taking the unemployment rate up to 9.8 per cent from 9.7 per cent in August when a revised 201,000 jobs were lost.
Economists polled by Bloomberg had been expecting the unemployment rate to rise to 9.8 per cent but had forecast a loss of only 175,000 jobs last month.
On Thursday, Wall Street suffered its biggest daily loss since early July after weekly jobless claims rose more than expected. The data showed that 551,000 Americans filed for their first week of unemployment benefits last week. The figure was up from a revised 534,000 in the previous week and worse than economists’ forecasts of 535,000.
After the market’s close, CIT, the lender to small and mid-sized companies, launched a debt exchange as part of a restructuring plan to avoid bankruptcy. The century-old group said about a third of its bondholders had agreed to participate in the exchange offer or would vote for the restructuring plan. The shares rose 9.4 per cent to $1.16.
Edge Petroleum filed for Chapter 11 bankruptcy protection, sending its shares down 69.8 per cent to 16 cents. The Houston-based company said it expected the bankruptcy court to enter a ruling in early December.
Jeffrey Immelt, General Electric’s chief executive said the company was holding discussions on partnerships or an initial public offering for its NBC Universal unit, as further reports suggested a deal would be struck with cable operator Comcast. General Electric shares were down 2.2 per cent to $15.62, while Comcast gained 0.6 per cent to $15.76.
Airlines were also expected to come under investor scrutiny after the European Union filed an antitrust complaint to AMR’s American Airlines, British Airways and Iberia over the carriers’ proposed trans-Atlantic alliance. AMR fell 1.8 per cent to $7.10.
Enteromedics plummeted 88 per cent to 88 cents after the company said its device for the treatment of obesity was not effective. The Maestro system had been designed to send electric impulses to block nerve impulses responsible for the sensation of hunger.
Resources Connection, the professional services firm, lost 1.8 per cent to $16.59 after the company reported a first-quarter loss late on Thursday due to a 51 per cent drop in international sales.
European stocks were firmly in the red before the opening on Wall Street. The FTSE Eurofirst 300 index was 1.4 per cent lower at 968.29.
Asian equity markets closed lower, led by a 2.5 per cent decline in Japan’s Nikkei index.
Bond yields were lower. The yield on the two-year Treasury note was two basis points lower at 0.841 per cent, while the 10-year Treasury note was down five basis points at 3.124 per cent.
The dollar index, which tracks the US currency’s progress against a basket of the world’s main currencies, gained 0.1 per cent.
Gold was trading 1 per cent lower at $989.20 per ounce and oil prices were also lower. The price of US crude fell $1.64 to $69.16 a barrel.
Markets spooked by weak US jobs data
By Michael Hunter
October 2 2009 14:04
World equities markets fell faster on Friday after news of much steeper-than-expected job losses in the US stoked growing concern about the strength of the global economic recovery.
September’s non-farm payrolls report showed the loss of 263,000 jobs, worse than the 180,000 in consensus forecasts, and even the 250,000 loss forecast by the most bearish analysis.
It was also a steeper drawdown than the 216,000 jobs lost in August and the overall unemployment rate in the US rose to 9.8 per cent from 9.7 per cent in August.
It was the 21st consecutive month the US economy lost jobs outside the agricultural sector, taking the total number of jobs lost since the start of the recession to over 7m.
Analysts at Goldman Sachs warned before the release of the data that the usual recruitment drive in the public sector, which boosts overall employment and accompanies the new academic year, would be softer than usual.
“September is the month when returning teachers (and other educational workers) show up in the payroll data.
“Although most jurisdictions have tried their best to avoid outright layoffs in this area, they have also clamped down on new hires. This suggests that we could see job losses on a seasonally adjusted basis, as jobs in this sector before seasonal adjustment normally rise about 14 per cent, or roughly 290,000 at current levels of the workforce, between August and September.”
Markets in Europe hit session lows after the data. London’s FTSE 100 fell 1.6 per cent to 4,969.99, the first time it was quoted under the 5,000 point mark since early September. The Xetra Dax 30 in Frankfurt gave up 1.7 per cent to 5,462.0. Overall, the FTSE Eurofirst 300 was 2 per cent softer at 962.36.
The equity market falls follow a strong performance for global equities indices during the third quarter, which ended earlier in the week. London’s FTSE 100 rose 21 per cent in the three-month period, the sharpest quarterly gain in its 25-year history. The FTSE Eurofirst 300 made gains of 17.5 per cent.
Futures trading indicated that losses on US equity indices would continue. The Dow Jones Industrial Average was called 122 lower at 9,349.0.
There were sharp falls across Asian equity markets on Friday ahead of the release of payrolls, following overnight declines on Wall Street.
Tokyo’s Nikkei 225 closed 2.5 per cent lower at 9,731.87 and the Hang Seng in Hong Kong was 2.7 per cent weaker in late trading.
On foreign exchange markets, the dollar held steady, as traders cut short positions in the US currency ahead of potential haven demand for it, should the non-farm payrolls report represent an unpleasant surprise.
Against the yen, the dollar slipped 0.5 per cent to Y89.14. Against the euro the dollar rose 0.1 per cent to $1.4515, as the haven properties of the US currency came into play.
Base metals, often used by investors as a proxy for betting on the prospects of global economic growth, were under pressure. Zinc fell 2.8 per cent to $1,867, while copper fell 2.5 per cent to $5,862
Crude prices were also weaker. Nymex WTI futures gave up 2.7 per cent to $68.92.
US Treasuries rose, forcing yields lower, with the 10-year yield falling 6.4 basis points to 3.11 per cent.
Stocks Drop After Weak Jobs Data
By GEOFFREY ROGOW
Wall Street Journal
U.S. stocks traded lower Friday, pointing to the sixth market decline in seven sessions, as the September nonfarm payrolls report came in well below Wall Street expectations.
In recent trading, the the Dow Jones Industrial Average was down about 41 points at 9467. General Electric, Boeing and Bank of America were the index's two biggest decliners, all off more than 2%. The Dow had been off nearly 100 points early in the morning but recently pared some of its earlier declines.
The Labor Department said employers eliminated more jobs than expected last month as the unemployment rate climbed to 9.8%, another sign that a rapid recovery in the labor market is unlikely.
Nonfarm payrolls declined by 263,000 in September, with the Labor Department noting that the largest job losses were in construction, manufacturing, retail trade and government. Economists surveyed by Dow Jones Newswires survey had expected a 175,000 decrease.
"It's a market that was going to be vulnerable to a more challenging environment anyway and the data has made it even more difficult," said Steven Goldman, a market strategist for Weeden & Co. "These pullbacks are quick and one wonders if we are in a transition mode."
A technical move for the Standard & Poor's 500, recently off 5 points at 1024, helped stocks pare some of their declines. That index bounced off its 50-day moving average around 1021, a level traders highlighted as a point of support for the index. Industrials were the S&P 500's weakest sector.
The Nasdaq Composite recently slid 1, or 0.1%, to 2056.
U.S. stocks were also hammered Thursday, setting off declines in market's across the globe overnight. In Thursday's U.S. session, as the fourth quarter kicked off, the employment component of the ISM manufacturing index triggered worries over the health of the economy. Friday's figure was just the latest in a string of recent economic reports suggesting a 60% run in the S&P 500 since March may have overextended the economic landscape. Overall, the S&P 500 has fallen in six of the last seven sessions, though the third quarter did mark its best quarterly performance since 1998.
"You're not seeing a lot of panic selling in this decline, it's actually been pretty orderly," said Richard Gatto, an equities and derivatives trader with Meridian Equity Partners. "Though, if we continue to go lower and for some reason get through the 930 level (on the S&P 500), then maybe people get nervous again."
In another piece of economic data on Friday, the Commerce Department said U.S. factory goods orders fell in August, brought down by a lower demand for airplanes and snapping a string of increases in a sign manufacturing's recovery from recession will be fitful.
Treasurys prices rallied after the latest U.S. nonfarm payroll data, while the euro rebounded versus the dollar and the dollar slipped against the yen.
Other events in the spotlight Friday include the International Monetary Fund and the G7 meeting in Istanbul.
Among stocks to watch, CIT rose 15% after the troubled lender announced a fresh restructuring program.
First Solar rose 5.3% after Standard & Poor's said the Tempe, Ariz.-based maker of solar power modules will be added to the S&P 500, replacing Wyeth, which is being bought by Pfizer.
Crude-oil futures fell below $70 a barrel Friday as participants took profits after Thursday's rally.
Write to Geoffrey Rogow at geoffrey.rogow@dowjones.com
Jobless Rate Reaches 9.8 Percent in September
Unemployment rate rises to 9.8 percent in September, as employers cut 263,000 jobs
By CHRISTOPHER S. RUGABER
The Associated Press
WASHINGTON
The unemployment rate rose to 9.8 percent in September, the highest since June 1983, as employers cut far more jobs than expected. The report is evidence that the worst recession since the 1930s is still inflicting widespread pain.
Persistently high unemployment could weaken the recovery as consumers, concerned about their jobs and incomes, restrain spending. Consumer spending accounts for about 70 percent of the nation's economy.
The Labor Department said Friday that the economy lost a net total of 263,000 jobs last month, from a downwardly revised 201,000 in August. That's worse than Wall Street economists' expectations of 180,000 job losses, according to a survey by Thomson Reuters.
The unemployment rate rose from 9.7 percent in August, matching expectations.
If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the unemployment rate rose to 17 percent, the highest on records dating from 1994.
More than a half-million unemployed people gave up looking for work last month. Had they continued searching, the official jobless rate would have been higher.
All told, 15.1 million Americans are now out of work, the department said. And more than 7.2 million jobs have been eliminated since the recession began in December 2007.
Many analysts expect the economy grew at a healthy clip in the July-September quarter, technically ending the recession, but few think the recovery will be strong enough to lower the jobless rate. Most economists expect the rate to top 10 percent and keep climbing.
The economy has received a boost from the Cash for Clunkers auto rebate program and other government stimulus efforts, but many economists believe that growth will slow in the current quarter and early next year as the impact of those programs fade.
Federal Reserve Chairman Ben Bernanke said Thursday that even if the economy were to grow at a 3 percent pace in the coming quarters, it would not be enough to quickly drive down the unemployment rate. Bernanke said the rate is likely to remain above 9 percent through the end of 2010.
Hourly earnings rose by a penny last month, while weekly wages fell $1.54 to $616.11, according to the government data.
The average hourly work week fell back to a record low of 33 in September. That figure is important because economists are looking for companies to add more hours for current workers before they hire new ones.
The uncertainty that surrounds the recovery has made employers reluctant to hire. The Business Roundtable, a group of CEOs from large corporations, said earlier this week that only 13 percent of its members expect to increase hiring over the next six months.
While job losses have slowed since the first quarter of this year when they averaged 691,000 a month, the cuts actually worsened last month in many sectors compared with August.
Construction jobs fell by 64,000, more than the 60,000 eliminated in August. And service sector companies cut 147,000 jobs, more than double the 69,000 in the previous month. Retailers lost 38,500 jobs, compared to less than 9,000 in August.
Temporary help agencies eliminated 1,700 jobs, down from the previous month, but still a sign of labor market weakness. Economists see temporary jobs as a leading indicator, as employers are likely to hire temp workers before permanent ones.
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