Published: Friday, December 18, 2009
Recovery’s missing ingredient: Job growth
WASHINGTON — A report on unemployment claims and a forecast of U.S. economic activity pointed Thursday to an economy mending slowly, without the job growth needed to fuel a vigorous recovery.
The number of newly laid-off workers filing claims for unemployment benefits unexpectedly rose last week. But the four-week average for jobless claims, which smooths out fluctuations, fell. That was an encouraging sign that the pace of layoffs continues to decline. The four-week average is now at its lowest point since late September 2008, when the financial crisis hit with full force.
Separately, a forecast of economic activity rose for the eighth straight month in November, a private research group said, signaling the economic rebound will continue into next year.
Still, employers across the country remain reluctant to ramp up hiring.
“People who have already lost their job are having incredible difficulty finding a job,” Dan Greenhaus, an economist at Miller Tabak, said in a research note Thursday.
A big problem is that companies lack confidence in the strength and sustainability of the recovery. FedEx Corp., for example, offered a tepid outlook Thursday for the quarter that ends in January. The package delivery company expects the recovery to continue next year. But FedEx questioned whether demand for its services will stay strong after the peak holiday- shipping season.
Stocks fell on concerns about a still-weak job market and after FedEx’s forecast fell short of expectations. In mid-afternoon trading, the Dow Jones was down 98 points, or about 0.9 percent.
The Conference Board said its index of leading economic indicators rose 0.9 percent last month, up from 0.3 percent in October. The latest reading beat the 0.7 percent rise that economists surveyed by Thomson Reuters had expected.
The board forecasts economic activity by measuring claims for unemployment aid, stock prices, consumer expectations, building permits for private homes, the money supply and other data. Improvements in financial conditions, housing permits and the labor market boosted the index, said Conference Board economist Ataman Ozyildirim.
Some analysts cautioned that the eighth consecutive gain in the index of leading indicators was overstating the economy’s underlying strength. Ian Shepherdson, chief U.S. economist at High Frequency Economics, noted that the index did not adequately reflect smaller firms.
“The index takes no account of the dire state of the small business sector, which ... remains in deep recession,” he said.
The number of newly laid-off workers filing claims for unemployment benefits unexpectedly rose last week. But the four-week average for jobless claims, which smooths out fluctuations, fell. That was an encouraging sign that the pace of layoffs continues to decline. The four-week average is now at its lowest point since late September 2008, when the financial crisis hit with full force.
Separately, a forecast of economic activity rose for the eighth straight month in November, a private research group said, signaling the economic rebound will continue into next year.
Still, employers across the country remain reluctant to ramp up hiring.
“People who have already lost their job are having incredible difficulty finding a job,” Dan Greenhaus, an economist at Miller Tabak, said in a research note Thursday.
A big problem is that companies lack confidence in the strength and sustainability of the recovery. FedEx Corp., for example, offered a tepid outlook Thursday for the quarter that ends in January. The package delivery company expects the recovery to continue next year. But FedEx questioned whether demand for its services will stay strong after the peak holiday- shipping season.
Stocks fell on concerns about a still-weak job market and after FedEx’s forecast fell short of expectations. In mid-afternoon trading, the Dow Jones was down 98 points, or about 0.9 percent.
The Conference Board said its index of leading economic indicators rose 0.9 percent last month, up from 0.3 percent in October. The latest reading beat the 0.7 percent rise that economists surveyed by Thomson Reuters had expected.
The board forecasts economic activity by measuring claims for unemployment aid, stock prices, consumer expectations, building permits for private homes, the money supply and other data. Improvements in financial conditions, housing permits and the labor market boosted the index, said Conference Board economist Ataman Ozyildirim.
Some analysts cautioned that the eighth consecutive gain in the index of leading indicators was overstating the economy’s underlying strength. Ian Shepherdson, chief U.S. economist at High Frequency Economics, noted that the index did not adequately reflect smaller firms.
“The index takes no account of the dire state of the small business sector, which ... remains in deep recession,” he said.
Comments
(