As the candidates in the US election continue to slug it out the economic situation remains grim for many of the citizens they wish to serve.
Employment data has shown that there were only 96,000 new jobs in the U.S. last month. Given the rate of population growth such minimal job creation will do little to reduce the nation’s economically damaging 8.1 per cent unemployment level.
Today the Labour Department has also revised last week’s jobless figures, raising the number from the initially reported 365,000 to 367,000. Typically, rapid job growth causes initial jobless claims to fall but other data has shown that jobless claims increased by 15,000 in the week ending September 8th. This surge is the highest for nearly two months and takes the figure to 382,000, higher than the mean forecast of 370,000 claims predicted by the 50 economists participating in a Bloomberg News survey.
General estimates had ranged from 360,000 to 380,000.
Guy Berger with RBS Securities Inc was one economist who felt that the figure would reach the 380,000 mark. He commented that: ‘The labour market continues to be disappointing. We’d like to see the hiring side pick up. Companies are very cautious given all the uncertainty.’
The shadow of hovering changes to U.S. tax policy coupled with the all encompassing effect of the global slowdown has made many companies and business either lay off staff or reluctant to hire.
The four week moving average of jobless figures is generally considered to offer a more stable result than the weekly reading but even that increased from 371,750 to 375,000. Twenty-three US territories and states also reported a rise in claims.
Although the Labour Department cited destruction caused by Tropical Storm Isaac as the reason behind 9,000 of the benefit claims the remaining increase still indicates that the outlook for jobs is little improved.
According to today’s report, in the week ending September 1st the continuing claims figure did drop by 49,000 to 3.28 million, but this number excludes those citizens in receipt of federally funded benefit programmes. The unemployment rate among the demographic eligible for benefits held at the 2.6 per cent level maintained since March.
During their campaigns both presidential candidates have commented on how persistent unemployment is damaging the nation and Federal Reserve Chairman Ben S. Bernanke has also noted it is a ‘grave concern’.
The Labour Department released a further report which demonstrated how much energy costs have climbed in recent weeks. In August the prices paid to producers climbed 1.7 per cent.
The Federal Reserve had previously implied that it was willing and ready to launch another round of fiscal measures to stimulate the economy and after the two-day meeting comes to a close later today what action it plans to take will be confirmed.
Some economists are forecasting that the Federal Reserve will implement a conditional, open-ended bond-buying programme. Others feel that it is far more likely that a third round of quantitative easing will be on the cards.
They might disagree on these points but the majority of economists are expecting the central bank to adjust its estimate for when the near-zero interest rates will rise and extend it from late 2014 to 2015.
This evening the Fed will reveal its own projections for economic growth and higher unemployment and these could be strong indicators of future policy manoeuvres
The Pound to Euro exchange rate is currently trading at 1.2480
The Pound to US Dollar exchange rate is currently trading at 1.6098
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The Euro to US Dollar exchange rate is currently trading at 1.2895
The Euro to Pound exchange rate is currently trading at 0.8010
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