New claims for jobless benefits for the week ending August 28th fell by 6,000 to 472,000 compared to the previous week. Employment remains a concern as companies hold off on hiring on fears that the economy could slow further in the second half of the year.
“The rate of layoffs is still uncomfortably high,” said Chris Low, chief economist at FTN Financial in New York. “This continues to feed the unemployment rolls. We see no reason to expect an acceleration in consumer spending.”
Source: Bloomberg
The European Central Bank lifted its growth prediction for the eurozone region to between 1.4 and 1.8 percent for this year, and for between 0.5 and 2.3 percent for next year.
ECB President Jean-Claude Trichet said the eurozone recovery has been supported by global growth and reflected “temporary domestic factors”.
He added, however, that “uncertainty still prevails”.
“One the one hand, global trade may continue to perform more strongly than expected, thereby supporting euro area exports,” he said. “On the other hand, concerns remain relating to the emergence of renewed tensions in financial markets and to some uncertainty about growth prospects in other advanced economies.”
Source: BBC News
The US Commerce Department announced today that the US economy grew at an annualized rate of 5.6 percent during the fourth quarter of 2009. Corporate profits also increased in the final three months of the year. Analysts suggest that should this trend continue, we could see meaningful employment gains, but not until later this year.
“So far, the income related to the surge in GDP is going to profits, but the next step is likely to be a clear pickup in labor income as well,” James O’Sullivan, chief economist at MF Global Ltd. in New York, said before the report. “We do expect to see a clear pickup in job growth, which leads to increases in spending.”
It is important to not however, that the actual results still fell short of the estimate of 5.9 percent. Federal Reserve Chairman Ben Bernanke made the point in his testimony yesterday before the House Financial Services Committee, that despite the recent growth, the economy is still under-performing and the employment outlook remains “very weak”.
“The economy continues to require the support of accommodative monetary policies,” Bernanke said in yesterday’s testimony.
Source: Bloomberg
Industrial output in the US increased in November as the US economy continues to gain strength heading into the new year. Output at factories, mines and utilities climbed 0.8 percent, after no change in October, the Federal Reserve said today in Washington. Manufacturing and mining rose, while warmer weather restrained utility demand. Capacity utilization, which measures the proportion of plants in use, increased.
“We’ll continue to see growth in manufacturing output, given strong exports and that consumers are spending,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York, who forecast a production gain of 0.9 percent. “You’re seeing a decent amount of breadth in terms of the increases.”
