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 user 2005-06-05 at 10:46:00 am Views: 55
  • #9526

    Sharp slowdown in US job growth

    US BMW factory

    The employment numbers were well below

    The US economy
    has recorded the smallest rise in employment in 21 months during May, new
    figures show.

    Just 78,000 people entered the workforce that month, the Department of Labor
    said – far fewer than the 185,000 predicted by analysts.

    Construction and health care firms added the most workers, taking on 20,000
    and 26,000 staff respectively.

    However, the unemployment rate fell to 5.1% from 5.2% in April, its lowest
    level since September 2001.

    ‘Soft patch’

    The US economy needs to create at least 150,000 jobs every month in order to
    keep pace with population growth, economists have estimated.

    “Payroll employment continued to grow over the month in healthcare and
    construction, but was little changed in the other major industry sectors,” the
    Labor Department said.

    This is more reason for the Federal Reserve to be close to the end
    of raising rates

    Robert MacIntosh, economist Eaton Vance

    The figures were the lowest for “non-farm” hiring since August 2003, and has
    led to fears of an economic slowdown.

    Factory payrolls contracted by 7,000 jobs in May, a third straight monthly
    decline, and the leisure sector lost 6,000 posts.

    “The concern here is whether the soft patch is going to extend beyond that
    April-May period,” said Marc Pado, US market strategist at Cantor Fitzgerald.

    “It would have been more of a negative if the number had been higher than

    Rates issue

    Although the figures have raised fears about the economy, they should mean
    that the US Federal Reserve is less likely to consider further interest rate
    rises in the near future.

    At the beginning of May, the Fed raised interest rates a quarter of a
    percentage point to 3%, after the payroll surge of 274,000 jobs in April.

    Commenting on the weak figures for May, Robert MacIntosh – chief economist
    for Eaton Vance Management in Boston – said: “This is more reason for the
    Federal Reserve to be close to the end of raising rates.”

    The unemployment rate is calculated on the basis of a survey of 60,000