The number of people seeking unemployment benefits jumped by 12,000 last week to 500,000 matching levels not seen since last November. This latest result adds further evidence pointing to a weakening of the recovery, suggesting that companies are slowing the rate of hiring. This meshes with statements from the Federal Reserve last week that the US recovery will be “more modest” than originally predicted.
“We’re seeing a renewed pickup in layoffs,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “If firms aren’t hiring it’s probably because they’re not producing. Demand will slow in the third quarter.”
Source: Bloomberg
An over-supply of homes is hampering economic recovery in the US said President Obama during a stop in Ohio.
“The housing market is still a big drag on the economy as a whole,” the President said. “It is going to take some time for us to absorb this inventory, that was really too high… We were building 2 million homes a year when only 1.4 were being absorbed.”
Source: BBC News
The number of new claims for jobless benefits for the week ended July 24th, fell by 11,000 from the week before to 457,000 new claims. Overall however, the number of people receiving unemployment benefits increased raising concerns that job growth in the US is slowing.
“It does feel like there’s been a little bit of a deceleration in the pace of hiring,” Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, said before the report. “It relates to a lot of fear and uncertainty around the sustainability of the recovery.”
Source: Bloomberg
The US Commerce Department released the latest consumer spending results this morning which showed that spending remained flat in April compared to an expected increase of 0.3 percent. This is the first time since last September that monthly spending did not increase.
The report also noted that incomes increased 0.4 percent for the second month, suggesting that consumers are rebuilding savings that many people relied on to make ends meet during the recession. Some analysts however, see an eventual return to spending once employment recovers to more typical levels.
“The consumer is going along for the ride but isn’t really leading the recovery,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “Because employment is growing, we’re starting to create some labor income and that is positive for future consumer spending.”
Source: Bloomberg
Citing ongoing concerns with Greece’s future and making only a passing reference to the slumping Euro, the European Central Bank (ECB) kept its benchmark interest rates at 1%.
“Greece is keeping the ECB in wait-and-see mode,” said Carsten Brzeski, an economist at ING Group in Brussels. “The indirect impact from the Greek case is that we will see more fiscal tightening from several euro-zone members earlier than the ECB thought, which has a deflationary impact and is slowing down the recovery.”
Source: Bloomberg
Switzerland’s leading KOF economic growth barometer rose to its highest since December 2007 in February, beating analysts’ expectations and confirming views that the economy was on track for a solid recovery.
The barometer increased to 1.87 points in February, the KOF Swiss Economic Institute said, more than the 1.80 reading forecast by analysts ECONCH. January’s reading was revised up to 1.81 from 1.77.
The barometer surged last year, though the monthly increases have slowed recently, indicating that the recovery would likely continue at a slower pace. Switzerland emerged from the worst recession in decades over the summer and several recent indicators have pointed to further recovery, though economists expect joblessness to peak later
this year.
Reuters
The US Labor Department said today that the Consumer Price Index (CPI) rose only 0.1 percent in December. Despite the slight increase in CPI, spending still remains muted as many families continue to struggle with unemployment and rising energy costs and this has had a dampening effect on the recovery.
Associated Press
New car sales helped push US retail sales to a gain of 1.4 percent in October, beating handily the expected 0.8 percent increase. However, when auto sales are removed from the calculation, retail sales only rose 0.2 percent suggesting that overall, consumer spending is still far below historical levels and leaving some analysts to question the likelihood of the recovery to maintain momentum.
Associated Press
Japan’s economy grew by 1.2 percent in the third quarter as the world’s second largest economy expanded at a faster rate than expected. Government stimulus spending was credited with boosting consumer spending and most economists suggest even though future growth is expected to be lower than the Q3 results, most experts believe there is little chance that Japan’s economy could return to recession.
BBC News
