Post by Bozur on Aug 3, 2008 12:43:40 GMT -5
Pressure grows for action on US economy
ft.com — Pressure for action to revive the economy grew on Friday as a new report showed the unemployment rate rose in July to 5.7 per cent – its highest for four years – and the number of jobs fell for a seventh straight month. The Labor Department data provided further evidence of deterioration in the economy as companies in a broad range of sectors More… (Business & Finance)
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Pressure grows for action on US economy
By James Politi in Washington
Published: August 1 2008 14:09 |
Last updated: August 2 2008 01:11
Pressure for action to revive the economy grew on Friday as a new report showed the unemployment rate rose in July to 5.7 per cent – its highest for four years – and the number of jobs fell for a seventh straight month.
The Labor Department data provided further evidence of deterioration in the economy as companies in a broad range of sectors including manufacturing, construction and retailing trimmed workforces.
But it also offered some encouragement since the pace of job losses – at 51,000 last month – was not as rapid as predicted by economists and remained below the levels in previous recessions. Officials said there were 26,000 fewer positions shed in May and June than previously reported.
“The labour market has not yet capsized but is taking on more water,” said Michael Feroli, a US economist at JPMorgan.
The jobs report capped a week of disappointing news. On Tuesday, it emerged that house prices had fallen at a record annual rate of 15.8 per cent in May, and later, Alan Greenspan, former Federal Reserve chairman, said they were “nowhere near the bottom”. On Thursday, the US said growth in the second quarter had been slower than economists had forecast, at an annualised rate of 1.9 per cent.
Democrats in Congress renewed their call for a second fiscal stimulus package. Barney Frank, chairman of the House financial services committee, said it should include “increases in the federal share of Medicaid, significantly increased funding for home energy assistance and food stamps, and other measures which will provide badly needed stimulus for our economy and help state and local governments and individuals improve the quality of their lives”. The White House said it was premature to discuss a second stimulus.
The average working week last month fell from 33.7 hours in June to 33.6 hours. Average hourly earnings rose at annual rate of 3.4 per cent, failing to reverse the gradual decline since last summer. Stocks fell, trimming modest weekly gains. In New York, the S&P 500 Index closed down 0.6 per cent.
Fed policymakers are widely expected to hold the main interest rate at 2 per cent next week.
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