Vegas
09-02-2007, 06:38 PM
http://www.bloomberg.com/apps/news?pid=20601087&sid=aR1cPSKDREZo&refer=home
Sept. 2 (Bloomberg) -- Employers in the U.S. hired enough workers in August to keep the unemployment rate near a six-year low, helping the nation weather turmoil in housing and credit markets, economists project a report this week will show.
Employers added 109,000 workers to payrolls last month, following a gain of 92,000 in July, according to the median estimate in a Bloomberg News survey ahead of a Labor Department report Sept. 7. A private report Sept. 4 may show manufacturing continued to expand.
``The underlying fundamentals are sound and the economy continues to grind forward,'' said Carl Riccadonna, an economist at Deutsche Bank Securities in New York. Growing employment ``largely avoids the economy going into a steeper downturn.''
Job and wage growth may sustain consumer spending, which accounts for more than two-thirds of the economy, as home values fall and loans become more difficult to get. The figures are the first economy-wide reports since credit costs surged globally last month in the wake of subprime losses that prompted the Federal Reserve to lower a key interest rate.
Fed Chairman Ben S. Bernanke last week said the central bank would do what's needed to prevent the credit-market rout from undoing the six-year expansion.
The central bank ``continues to monitor the situation and will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets,'' he said at the Kansas City Fed's annual symposium in Jackson Hole, Wyoming.
Fed's Focus
Bernanke said the Fed would ``pay particularly close attention to the timeliest indicators'' since data prior to August may not capture the credit turmoil. Futures contracts are pricing a certain cut in the benchmark federal funds rate at the central bank's policy meeting Sept. 18.
The Fed will issue its Beige Book, a compendium of regional economic anecdotes, on Sept. 5. Policy makers will use the information to frame their discussion on the economy at their next meeting.
The jobless rate held at 4.6 percent for a second month and wages were up 3.9 percent from August 2006, the unemployment report is also forecast to show. The jobless rate reached 4.4 percent in March and October, the lowest since 2001.
Gains in jobs and wages are even more important now that falling home and equity prices, as well as the credit turmoil, are taking a bite out of Americans' purchasing power. Consumer spending slowed to a 1.4 percent annual pace in the second quarter, down from 3.7 percent the previous three months.
Growing Exports
Even as real estate prices declined, making it harder for consumers to borrow against home equity, and stocks tumbled in August, foreign demand for U.S.-made goods and inventory building helped keep factory-assembly lines busy.
The Tempe, Arizona-based Institute for Supply Management's factory index for August probably showed manufacturing grew for an eighth month, even as growth slowed. The index slipped to 53 from 53.8 in July, according to a Bloomberg survey median. Readings greater than 50 signal expansion. The gauge averaged 53.9 in 2006.
The ISM's non-manufacturing index, due Sept. 6, eased to 54.5 for August from 55.8 in July, according to the survey median.
Another report, due from the Commerce Department on Sept. 4, may show construction spending was unchanged in July after falling 0.3 percent in June, according to a survey.
Declines in residential construction have detracted from overall growth for the last six quarters, and the housing slump is prompting economists to warn of rising risks of recession.
Harvard University economist Martin Feldstein, who heads the group that dates U.S. recessions, said Aug. 31 there is a ``significant risk'' of a contraction.
``Downturns in housing construction have almost always been followed by a downturn in the economy, by a recession,'' Feldstein said in an interview from Jackson Hole. ``My judgment is there is enough of a risk that the Federal Reserve should be responding to that risk'' by cutting interest rates.
Sept. 2 (Bloomberg) -- Employers in the U.S. hired enough workers in August to keep the unemployment rate near a six-year low, helping the nation weather turmoil in housing and credit markets, economists project a report this week will show.
Employers added 109,000 workers to payrolls last month, following a gain of 92,000 in July, according to the median estimate in a Bloomberg News survey ahead of a Labor Department report Sept. 7. A private report Sept. 4 may show manufacturing continued to expand.
``The underlying fundamentals are sound and the economy continues to grind forward,'' said Carl Riccadonna, an economist at Deutsche Bank Securities in New York. Growing employment ``largely avoids the economy going into a steeper downturn.''
Job and wage growth may sustain consumer spending, which accounts for more than two-thirds of the economy, as home values fall and loans become more difficult to get. The figures are the first economy-wide reports since credit costs surged globally last month in the wake of subprime losses that prompted the Federal Reserve to lower a key interest rate.
Fed Chairman Ben S. Bernanke last week said the central bank would do what's needed to prevent the credit-market rout from undoing the six-year expansion.
The central bank ``continues to monitor the situation and will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets,'' he said at the Kansas City Fed's annual symposium in Jackson Hole, Wyoming.
Fed's Focus
Bernanke said the Fed would ``pay particularly close attention to the timeliest indicators'' since data prior to August may not capture the credit turmoil. Futures contracts are pricing a certain cut in the benchmark federal funds rate at the central bank's policy meeting Sept. 18.
The Fed will issue its Beige Book, a compendium of regional economic anecdotes, on Sept. 5. Policy makers will use the information to frame their discussion on the economy at their next meeting.
The jobless rate held at 4.6 percent for a second month and wages were up 3.9 percent from August 2006, the unemployment report is also forecast to show. The jobless rate reached 4.4 percent in March and October, the lowest since 2001.
Gains in jobs and wages are even more important now that falling home and equity prices, as well as the credit turmoil, are taking a bite out of Americans' purchasing power. Consumer spending slowed to a 1.4 percent annual pace in the second quarter, down from 3.7 percent the previous three months.
Growing Exports
Even as real estate prices declined, making it harder for consumers to borrow against home equity, and stocks tumbled in August, foreign demand for U.S.-made goods and inventory building helped keep factory-assembly lines busy.
The Tempe, Arizona-based Institute for Supply Management's factory index for August probably showed manufacturing grew for an eighth month, even as growth slowed. The index slipped to 53 from 53.8 in July, according to a Bloomberg survey median. Readings greater than 50 signal expansion. The gauge averaged 53.9 in 2006.
The ISM's non-manufacturing index, due Sept. 6, eased to 54.5 for August from 55.8 in July, according to the survey median.
Another report, due from the Commerce Department on Sept. 4, may show construction spending was unchanged in July after falling 0.3 percent in June, according to a survey.
Declines in residential construction have detracted from overall growth for the last six quarters, and the housing slump is prompting economists to warn of rising risks of recession.
Harvard University economist Martin Feldstein, who heads the group that dates U.S. recessions, said Aug. 31 there is a ``significant risk'' of a contraction.
``Downturns in housing construction have almost always been followed by a downturn in the economy, by a recession,'' Feldstein said in an interview from Jackson Hole. ``My judgment is there is enough of a risk that the Federal Reserve should be responding to that risk'' by cutting interest rates.