vailpass
06-05-2010, 02:32 PM
obama fail
Bleak news on jobs adds gloom to market
Majority of new hires were only temporary
By Steven Syre, Globe Staff | June 5, 2010
US companies created only a handful of new jobs in May, casting fresh doubts on the strength of the economic recovery and sending the stock market into a tailspin yesterday.
The US Bureau of Labor Statistics reported that the country’s nonfarm employment increased by 431,000 jobs last month, but nearly all of those were government hires, temporary positions related to the 2010 census. Less than one-tenth of the new jobs — 41,000 — were at companies in the private sector.
Rex Macy, chief investment officer of Wilmington Trust Investment Management, likened yesterday’s employment report to one pixel in a developing picture.
“It’s a dark pixel painting a gloomier image,’’ Macy said. “But the total picture we see is one of a fragile economy and a frail recovery. We get good news, then bad news and people are nervous.’’
Some sectors of the economy did add jobs, including manufacturing, while others suffered notable losses. The construction industry lost 35,000 jobs in May, ordinarily a busy time of year for the building trades. Another less-than-reassuring sign: One of the sectors reporting the largest job growth remains the temporary help business, indicating that employers are still not ready to take the next step and make permanent hires.
The employment report had a particularly bleak view of life for those without jobs. The average duration of unemployment increased to 34.4 weeks, from 33 weeks in April, and is now the longest period on record for Americans waiting to return to work. The hiring picture was also considerably dimmer than what President Obama had predicted. Earlier in the week, the president said the May report would show “strong job growth.’’
As that didn’t turn out, Obama’s tone yesterday was more modulated, as he sought to remind people the economy recovery was still in its early stages.
“Things never go completely in a smooth line,’’ he said. The president urged patience, said his policies are working, and added the economy is “moving in the right direction’’ because it is nonetheless producing jobs again.
Including the new government positions, the overall 413,000 job increase was the single largest one-month gain in a decade, and helped drive the nation’s unemployment rate to 9.7 percent from 9.9 percent.
But economists and investors looked right past those headline numbers yesterday. Economists had been expecting much larger job gains in May — at 100,000 more on average — so the particularly weak showing by private sector employers was an unexpected jolt to Wall Street.
The Dow Jones industrial average closed yesterday below 10,000, the second time in two weeks, ending yesterday down 323.31 points at 9,931.97, its lowest close in nearly four months. All 30 stocks in the benchmark index lost value, reflecting broad anxiety about the direction of the economy.
“People are beginning to feel that the pace of the economic improvement is slowing,’’ said Ken Taubes, chief US investment officer for Pioneer Investments in Boston. “People are scaling back their expectations.’’
Investors and economists blamed some of the sluggish economic growth on the European debt crisis, reasoning that American companies are worried about the health of one of the world’s largest consumer markets and therefore holding back on hiring.
“My sense is there’s going to be some significant pulling back of spending, mainly in terms of hiring, until the dust blows over,’’ said economist Brian Bethune of IHS Global Insight in Lexington. “What we’ve seen consistently is that the American business sector has been able to adjust’’ to changing economic developments.
Indeed, just yesterday Hungary said that its economy was in “very grave’’ condition, after that country’s new government determined it may not have the money to pay its debt. That brings to at least four — including Greece, Spain, and Portugal — the number of European countries whose debt problems have become so severe they are affecting the continent’s economy.
Hungary’s unsettling disclosure helped push the euro below $1.20 for the first time since 2006, as investors feared the financial contagion would continue to spread through Europe. The euro is now down more than 20 percent against the US dollar since its most recent peak in November.
Europe’s problems are but one factor that has kept US stock markets on edge for the past few months. Contradictory economic reports have sharply increased the volatility of stock prices, and on bad days helped to erase some of the huge gains markets had posted since the meltdown from the global credit crisis in 2008.
A bull market that began in March 2009 brought stocks back 70 percent from their 2008 lows. But since peaking in April, US stocks have fallen 11 percent.
The economy, and consequently stock markets, often move in fits and starts during the early stages of a recovery. The first months can often be marked by slow job creation, while stocks frequently retreat after steep climbs. After the relatively mild 2001 recession hiring by companies accelerated and then slowed at times.
But strong job growth is more important in this recovery because unemployment is especially high and the nation lost so many jobs in 2008 and 2009.
“I think investors need to see evidence the economic recovery, although halting, is intact,’’ said James Weiss of Weiss Capital Management in Concord.
And going forward, the economy can’t rely on the US Census for new job growth. The agency’s hiring for the decennial head count peaked in May and its overall employment will be declining in June.
http://www.boston.com/business/markets/articles/2010/06/05/bleak_news_on_jobs_adds_gloom_to_market?mode=PF
Bleak news on jobs adds gloom to market
Majority of new hires were only temporary
By Steven Syre, Globe Staff | June 5, 2010
US companies created only a handful of new jobs in May, casting fresh doubts on the strength of the economic recovery and sending the stock market into a tailspin yesterday.
The US Bureau of Labor Statistics reported that the country’s nonfarm employment increased by 431,000 jobs last month, but nearly all of those were government hires, temporary positions related to the 2010 census. Less than one-tenth of the new jobs — 41,000 — were at companies in the private sector.
Rex Macy, chief investment officer of Wilmington Trust Investment Management, likened yesterday’s employment report to one pixel in a developing picture.
“It’s a dark pixel painting a gloomier image,’’ Macy said. “But the total picture we see is one of a fragile economy and a frail recovery. We get good news, then bad news and people are nervous.’’
Some sectors of the economy did add jobs, including manufacturing, while others suffered notable losses. The construction industry lost 35,000 jobs in May, ordinarily a busy time of year for the building trades. Another less-than-reassuring sign: One of the sectors reporting the largest job growth remains the temporary help business, indicating that employers are still not ready to take the next step and make permanent hires.
The employment report had a particularly bleak view of life for those without jobs. The average duration of unemployment increased to 34.4 weeks, from 33 weeks in April, and is now the longest period on record for Americans waiting to return to work. The hiring picture was also considerably dimmer than what President Obama had predicted. Earlier in the week, the president said the May report would show “strong job growth.’’
As that didn’t turn out, Obama’s tone yesterday was more modulated, as he sought to remind people the economy recovery was still in its early stages.
“Things never go completely in a smooth line,’’ he said. The president urged patience, said his policies are working, and added the economy is “moving in the right direction’’ because it is nonetheless producing jobs again.
Including the new government positions, the overall 413,000 job increase was the single largest one-month gain in a decade, and helped drive the nation’s unemployment rate to 9.7 percent from 9.9 percent.
But economists and investors looked right past those headline numbers yesterday. Economists had been expecting much larger job gains in May — at 100,000 more on average — so the particularly weak showing by private sector employers was an unexpected jolt to Wall Street.
The Dow Jones industrial average closed yesterday below 10,000, the second time in two weeks, ending yesterday down 323.31 points at 9,931.97, its lowest close in nearly four months. All 30 stocks in the benchmark index lost value, reflecting broad anxiety about the direction of the economy.
“People are beginning to feel that the pace of the economic improvement is slowing,’’ said Ken Taubes, chief US investment officer for Pioneer Investments in Boston. “People are scaling back their expectations.’’
Investors and economists blamed some of the sluggish economic growth on the European debt crisis, reasoning that American companies are worried about the health of one of the world’s largest consumer markets and therefore holding back on hiring.
“My sense is there’s going to be some significant pulling back of spending, mainly in terms of hiring, until the dust blows over,’’ said economist Brian Bethune of IHS Global Insight in Lexington. “What we’ve seen consistently is that the American business sector has been able to adjust’’ to changing economic developments.
Indeed, just yesterday Hungary said that its economy was in “very grave’’ condition, after that country’s new government determined it may not have the money to pay its debt. That brings to at least four — including Greece, Spain, and Portugal — the number of European countries whose debt problems have become so severe they are affecting the continent’s economy.
Hungary’s unsettling disclosure helped push the euro below $1.20 for the first time since 2006, as investors feared the financial contagion would continue to spread through Europe. The euro is now down more than 20 percent against the US dollar since its most recent peak in November.
Europe’s problems are but one factor that has kept US stock markets on edge for the past few months. Contradictory economic reports have sharply increased the volatility of stock prices, and on bad days helped to erase some of the huge gains markets had posted since the meltdown from the global credit crisis in 2008.
A bull market that began in March 2009 brought stocks back 70 percent from their 2008 lows. But since peaking in April, US stocks have fallen 11 percent.
The economy, and consequently stock markets, often move in fits and starts during the early stages of a recovery. The first months can often be marked by slow job creation, while stocks frequently retreat after steep climbs. After the relatively mild 2001 recession hiring by companies accelerated and then slowed at times.
But strong job growth is more important in this recovery because unemployment is especially high and the nation lost so many jobs in 2008 and 2009.
“I think investors need to see evidence the economic recovery, although halting, is intact,’’ said James Weiss of Weiss Capital Management in Concord.
And going forward, the economy can’t rely on the US Census for new job growth. The agency’s hiring for the decennial head count peaked in May and its overall employment will be declining in June.
http://www.boston.com/business/markets/articles/2010/06/05/bleak_news_on_jobs_adds_gloom_to_market?mode=PF