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Dismal job, growth data cloud u.s. economic prospects by ferujkll sdff
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Dismal job, growth data cloud u.s. economic prospects |
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Business,Business News,Business Opportunities
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Jobless rate trended higher, and job gains slumped to the lowestlevel in a year. The closely watched employment report came Friday,only adding gloom to a less rosy economic picture. A separatereport on Thursday from the Commerce Department showed the firstquarter economic growth was not as strong as first estimated. Theslowed growth and weak job data sparked worries that the recoveryof the world's largest economy may lose momentum. JOB ENGINE STALLED After continued decline for months, the jobless rate rose slightlyto 8.2 percent in May with less-than-expected job gains.
Thedisappointing data sent the stocks down by more than 1 percent inthe morning trading session on Friday. The economy merely added 69,000 jobs, fewer than half of marketexpectations. At the same time, the Labor Department revised downits estimate for the payroll gains for March and April by a totalof 49,000 jobs. The long-term unemployment problem remains acute. A total of 42.
8percent of the unemployed have been out of job for more than 6months. The labor force participation rate edged up to 63.8 percent withmore than 600,000 people rejoined the world force, which could be apositive sign. Gary Burtless, a senior fellow at the Brookings Institution, saidthe latest employment report offered a "mixed and mostlyunpromising" picture of the job market recovery. "To keep pace with the growth in the working-age populationemployers need to add between 90,000 and 100,000 jobs every month," Burtless said. Mark Zandi, chief economist at Moody's Analytics, said the jobmarket took "a big step back" in May and prompted a downwardrevision to the outlook for hiring over the next few months.
Another two previously released job indicators also accentuated thefluctuations in labor market improvement. The weekly applications for unemployment insurance last week rose10,000 to 383,000, a five-week high. It is above the threshold of375,000 to indicate a sustained drop in the unemployment rate. Moreover, a survey from the payrolls processing company AutomaticData Processing (ADP) showed that the American private sector addedonly 133,000 jobs in May, fewer than economists' average estimateof 150,000. Estimated gains for April were also revised lower to113,000.
Economists say that the current pace of job growth is not veryimpressive and is consistent with an economy that is growingmodestly. GROWTH FELL BACK The Commerce Department lowered its estimate for the growth ofJanuary-to-March period to 1.9 percent on Thursday, a decelerationfrom an initially estimated 2.2 percent pace. The figure was alsopale in comparison with the 3-percent growth in the fourth quarterlast year. The downward revision largely reflected smaller gains ininventories, a higher estimate for imports, and even lowergovernment spendings than first estimated. Consumer spending, which accounts for about 70 percent of the U.
S.economy, grew by a 2.7-percent annual rate, slight lower than the2.9-percent uptick figure in the advance estimate released lastmonth, but higher than 2.1 percent in the previous quarter. Real exports of goods and services increased 7.2 percent in thefirst quarter, higher than 5.4 percent in the advance estimate.Real imports of goods and services increased 6.1 percent, higherthan 4.3 percent in the advance estimate. Real federal government consumption expenditures and grossinvestment decreased 5.9 percent, larger than the 5.6 percentdecline in the initial estimate. The change in real private inventories added only 0.21 percentagepoints to the first-quarter change in real GDP, lower than the 0.59percentage point contribution in the first estimate.
On the positive side, gross domestic income, an alternative measureof national output, rose 2.7 percent in the first quarter,outpacing the GDP growth. Many economists projected that the U.S. economy may expand at amodest rate of about 2 percent through the whole year. INCREASING HEADWINDS The weak showing with growth and job market reinforced thehypothesis that unusually warm winter may have helped boostrecovery and sugared up some economic data. Analysts argued that jobs which normally would have been added inthe spring were created in the winter instead, bringing strong jobgains averaged more than 200,000 per month between December andFebruary.
"The economy has been unable to sustain the burst of momentum inthe fourth quarter," said Millan Mulraine, economist at TDSecurities. Fears are growing that deepening financial crisis in Europe andfiscal uncertainties caused by the "fiscal cliff" -- Bush-era taxcuts are expiring at the year end and mandatory spending reductionsare scheduled to kick in next year -- would dampen businessconfidence and hurt U.S. economy. The Congressional Budget Office estimated that because of thecombination of spending reductions and tax increases, the U.S.economy would shrink 1.3 percent in the first half of 2013.
The gloomy data also fueled market discussion about whether theFederal Reserve would take further actions to stimulate economywhen its Operation Twist program phased out at the end of June. Minutes of the Fed's April policy meeting showed that "several"officials indicated that additional monetary policy could benecessary if economic recovery lost momentum or downside risksbecame great enough. Should June's numbers disappoint again, said Zandi, the strength ofrecovery would be in serious question and the Fed would need toact. I am an expert from Packaging & Paper, usually analyzes all kind of industries situation, such as trash compactor 12 , permanent adhesive label.
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