The U.S Economy Sheds Much Less than Expected Jobs and Unemployment Peaks at 9.4 Percent!
The U.S Economy Sheds Much Less than Expected Jobs and Unemployment Peaks at 9.4 Percent!
Surprising indeed was the final revelation and the labor market had something else to say to all analysts and investors as the nonfarm payrolls testified that the recession is easing and the pace of layoffs has slowed as the worst has indeed passed us!
The Labor Department’s infamous Employment Situation Report showed that the U.S economy last month only lost 345,000 jobs after the 504 thousand lost in April which revised to the upside from the initial estimate of 539 thousand. The final reading was much better the markets’ expectations for 520,000 lost jobs which intensified the optimistic sentiment even further that the labor market as well is easing as sectors across the board start to ease their contraction and the economy will indeed start its path to recovery by year’s end.
Revisions reported for the previous two months totaled 82,000 which brings today’s net payrolls to an even brighter figure or ONLY 263,000 which is a number missed after an abysmal first quarter were losses nearly averaged 700,000 in the three months!
Meanwhile, the unemployment rate has soared to a 26-year high of 9.4% rising from April’s 8.9% exceeding expectations of 9.2%. Most of the rise was resolved to the fact that the civilian surveyed working force has increased dismissing the weakness it reflected as the households survey is wider scoped than the nonfarm payrolls!
Optimism is wide spread for the U.S economy to rebound from this crisis, as the economy is not seen recovering by the end of this year. Though I do see signs of bottoming of this recession yet I do not believe that the economy is to build up directly from here for the contraction has eased and not growth has returned as we are to consolidate at the bottom for quite a while before resuming back to normality as this crisis has hit the economy severely by all means!
Sectors across the economy were providing sings of eased contraction and the second quarter already looks much better of that the abysmal first three months of the year, were so far the economy is reported to have shrunk by 5.7 percent. Looking at the sectors’ contribution to the final payrolls figure we’ll start with the total private sector were cuts eased to 338,000 from 596 thousand.
The manufacturing sector on the other hand, lost more jobs than expected cutting 156 K after a downwardly revised previous of 154. Services on the other hand eased much the job cuts to 120,000 nearly half the previous month’s 230 thousand. Financial and Business services also cut fewer jobs by 30 and 51 thousand jobs respectively. Education and health added 44 thousand jobs after adding 13,000 the previous month while Leisure and Hospitality also added 3000 jobs after shedding 38 thousand the previous month as the summer travel and touring season begins!
The government, which seemingly is already on the pace to cut costs to cover its expanding deficit, has cut 7 thousand jobs after added 92 thousand the previous month, while the Federal Government cut 15 thousand after adding 86 thousand in April.
All in all, the data supported the optimistic notion and helped markets hold their gains and powered the dollar to add gains, as investors focused on the good for now forgetting that the market will continue as soft as seen into next year and the unemployment rate will merely top 10% by year end and will not go back to the healthy considered levels of 5.0% till at least 2013!
The jobs jamboree managed to take us by surprise again and help us seal yet another hectic weak for the US economy. U.S stocks were enjoying the gains still during midday trading as the data powered investors to withhold hope. As of 12:29 EST the DJIA was trading higher by almost 0.7% at 8810.72, the S&P 500 was higher by nearly 0.4% at 945.84 and finally the NASDAQ was higher by almost 0.3% at 1856.11.
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