US payroll data shows zero net jobs growth
Friday, 02 September 2011 02:53
The US Department of Labor has released its highly anticipated non-farm payroll figures which reveal that net jobs did not increase in August, staying level from July.
Additionally, job figures for both June and July were revised downwards from their initial estimate. The net increase in jobs for June was revised down from 46,000 to 20,000 and July’s increase was revised downwards from 117,000 to 85,000. These revisions were due to fewer government jobs being created than estimated.
Analysts had expected that there would be an increase of 70,000 in August. However, the payrolls show that there was no change, the first time this has been the case since 1945.
The unemployment rate remained unchanged from July at 9.1 per cent. Private payrolls increased by 17,000.
The data has increased concerns that we could be entering a global recession. A spokesman for Barclays commenting on the data said: "This raises the possibility of further policy action."
Stock markets around the world had fallen earlier in the day ahead of this key data and they fell further once the numbers were released. They were also influenced by the news that the US housing finance agency is to sue a dozen US banks for selling poor quality mortgages at the height of the housing bubble.
By 3pm today, two hours after the announcement the Dow Jones had fallen by more than 200 points, more than 3.50 per cent. The FTSE 100 was down by around 140 points at the same points with Lloyds and Barclays being amongst the worst performers.
The figures were skewed slightly by the situation with employees of Verizon. 45,000 workers were on strike and did not appear in the number of employees, as they were not working in the period surveyed. These employees have now returned to work.
Max Johnson, a broker at forex specialists, Currency Solutions commented: "US companies have no confidence in the US economy and no confidence in the country's political leadership, so it's no surprise no jobs are being created.
"The US economy is looking increasingly forlorn and this latest jobs data will apply further downward pressure on the Dollar.
"Last week in Jackson Hole Bernanke said the Fed has options to stimulate the economy. If this is the case, then why the delay using them?
"QE3 is now surely on the cards. If it fails to act soon, the Fed could do irreparable damage to both the US and global economy."
Focus will now shift to President Obama’s speech next Thursday, in which he is expected to announce stimulus for boosting economic growth and creating jobs.
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