Friday, October 3, 2008

Non-Farm Employment

September NFP—Consensus Estimate 90K to 105K Loss in Payroll Jobs

U.S. employers slashed jobs for an eighth consecutive month in August and the nation's unemployment rate soared to a five-year high of 6.1%, up from 5.7% in July and 4.7% from one year ago. That's the highest it has been for 5 years.

In August, the economy suffered a net loss of 84,000 jobs, worse than the market forecast for a 75,000 decline. Additionally, job losses in June and July turned out to be much higher than originally reported. The economy lost an astounding 100,000 jobs in June and another 60,000 in July, according to revised figures. Previously, the Labor Department reported job losses at 51,000 in each of those months. So far this year, job losses have totaled 605,000.

Despite this, consumer confidence continued to edge up from record lows, rising 1.3 points in September to 59.8 versus an upwardly revised 58.5 reading in August. This gain was led by a significant 6.4 point gain in the expectations component to 60.5. If the past holds true, this rise in expectations points to overall improvement in the coming months. Furthermore, the US dollar rose today to its highest level in over a year against the Euro and other major currencies after the ECB opened the door for its first rate cut in five years.

For week ending September 27, the Labor Department reported that the advance figure for seasonally adjusted initial claims was 497,000, an increase of 1,000 from the previous week's revised figure of 496,000. It is estimated that the effects of Hurricane Gustav in Louisiana and the effects of Hurricane Ike in Texas added approximately 45,000 claims to the total. The 4-week moving average was 474,000, an increase of 11,500 from the previous week's unrevised average of 462,500.

Notwithstanding the increase in consumer confidence and strengthening of the US dollar, August's nonfarm payroll report showed the increasing toll that the housing, credit and financial crises are taking on the economy. With the employment situation seemingly deteriorating, there's growing worry that consumers will recoil, throwing the economy into a tailspin later this year or early next year. If unemployment continues to climb, watch for the Fed to ease its base interest rate.

source from interbenkfx.

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