A SHARP FALL in monthly US job losses to 345,000 raised hopes yesterday that the end of the recession may not be far away.
Unemployment in May rose to 9.4 per cent, its highest rate in 26 years. However, the step-down in the rate of job losses to about half the average of the previous six months has raised hopes.
“We think these numbers are consistent with the official recession being nearly over,” said Ian Morris, chief US economist at HSBC.
Traders speculated that the US Federal Reserve might raise interest rates sooner than expected.
However, a rate rise before year-end seems highly unlikely given estimates of a large and growing gap between potential supply and demand illustrated by the rise in unemployment.
The Obama administration was cautious yesterday. “There is going to be more contraction. I am not satisfied, and I don’t think this administration is satisfied,” US labour secretary Hilda Solis said.
Long-term unemployment jumped 268,000 to 3.9 million.
The number of jobs lost in May was still larger than in the worst month of either of the preceding two recessions, and might have been cushioned by technical adjustments.
Hours worked – the broadest measure of labour market activity – fell 0.7 per cent, and wages were flat, resulting in a fall in earned income. – (Copyright The Financial Times Limited 2009)
