U.S. December Job Cuts Drop to 84,000, Fewest Since March 2008
Jan. 6 (Bloomberg) — Companies in the U.S. cut an estimated 84,000 jobs in December, according to a private report based on payroll data.
The drop, the smallest since March 2008, was larger than forecast and compares with a revised 145,000 decline the prior month, data from ADP Employer Services showed today. ADP figures overstated the Labor Department’s estimate of private payroll losses by 85,000 per month on average in the six months to November after today’s revisions.
Figures from the Labor Department show firings have slowed as the world’s largest economy began to recover from the worst recession since the 1930s. Economists surveyed by Bloomberg News anticipate the government’s report Jan. 8 will indicate job losses came to an end last month after two years of declines that eliminated 7.2 million workers from payrolls.
“There is an improving trend,” Michael Gregory, a senior economist at BMO Capital Markets in Toronto, said before the report. “We may turn the corner in January or February. We’re probably still a month away from positive territory.”
The ADP figures were forecast to show a decline of 75,000 jobs, according to the median estimate of 31 economists surveyed by Bloomberg survey.
ADP includes only private employment and doesn’t take into account hiring by government agencies. Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.
Fewer Announcements
Another report today showed employers last month announced the fewest job cuts since the recession began in December 2007 as the economic recovery encouraged companies to retain staff. Planned firings fell 73 percent in December to 45,094 from 166,348 during the same month the prior year, Chicago-based placement firm Challenger, Gray & Christmas Inc. said.
The Labor Department’s report in two days is also forecast to show the unemployment rate climbed to 10.1 percent in December from 10 percent the prior month, according to the survey median.
The number of jobs lost since the recession began in December 2007 is the biggest in the post-World War II era.
Today’s ADP report showed a decrease of 96,000 workers in goods-producing industries including manufacturers and construction companies. Service providers added 12,000 workers.
Employment in construction fell by 52,000, the 35th straight monthly drop, while financial firms decreased jobs by 12,000, ADP said, the 25th consecutive decline for the industry.
Companies employing more than 499 workers shrank their workforce by 34,000 jobs. Medium-sized businesses, with 50 to 499 employees, eliminated 25,000 jobs and small companies decreased payrolls by 25,000, ADP said.
The ADP report is based on data from about 360,000 businesses with about 22 million workers on payrolls. ADP began keeping records in January 2001 and started publishing its numbers in 2006.
Emerging-Market Stocks Climb; China’s Index Jumps Most in World
Dec. 24 (Bloomberg) — Emerging-market stocks rose for a third day, with China’s benchmark index posting the biggest rally worldwide, as commodity and computer-chip prices climbed on speculation government stimulus is reviving economic growth.
The MSCI Emerging Markets Index advanced 0.9 percent to 972.59 at 8:45 a.m. in London, heading for the highest closing level in a week. China’s Shanghai Composite Index jumped 2.6 percent. The extra yield investors demand to own emerging-market debt over U.S. Treasuries dropped 4 basis points to 2.86 percentage points, the lowest level since August 2008, according to JPMorgan Chase & Co.’s EMBI+ Index.
Chinese shares advanced the most this month after the 21st Century Business Herald said the government may cut taxes for small and medium-sized businesses and technology companies. South Korea’s Hynix Semiconductor Inc. led gains in chipmakers after prices for dynamic-random-access-memory chips jumped 4.2 percent yesterday to the highest level since Nov. 25. OAO GMK Norilsk Nickel climbed in Moscow as nickel and copper prices rose more than 1 percent.
“All this stimulus funding has gone into the economy and pushed the equity market higher,” Manoj Ladwa, an equity strategist at ETX Capital in London, said in an interview on Bloomberg Television. “We’re going to see a continuation in the first quarter of 2010.”
Orders for U.S. durable goods probably rose in November as improving sales prompted companies to boost stockpiles and invest, economists said before a report today. Bookings for goods meant to last several years increased 0.5 percent after declining 0.6 percent in October, according to the median estimate of 72 economists surveyed by Bloomberg News. Another report may show fewer Americans applied for jobless benefits last week.
U.K. Economy Shrinks Less Than Previously Estimated
Dec. 22 (Bloomberg) — The U.K. economy shrank less than previously estimated in the third quarter as a jump in construction and fixed investment brought the longest recession on record closer to ending.
Gross domestic product fell 0.2 percent from the second quarter, compared with a previous measurement of a 0.3 percent drop, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 24 economists was for a 0.1 percent contraction. The recession has now shaved 6 percent off GDP, the statistics office said.
The Confederation of British Industry yesterday raised its 2010 economic growth forecast and said the Bank of England may pause its bond-purchase plan in February. Policy makers have pledged to print 200 billion pounds of new money to stoke spending and shake off Britain’s longest recession on record.
“We’ll have growth returning in the fourth quarter, absolutely,” said George Buckley, chief U.K. economist at Deutsche Bank AG in London. “The bank will start taking back its policy accommodation next year. There won’t be any more bond purchases, and the first rate increase will be in August.”
The pound was little changed at $1.6046 as of 9:53 a.m. in London. The yield on the two-year government bond was up 1 basis point today at 1.185 percent.
Recession Damage
The economy contracted 5.1 percent from a year earlier, more than the 4.9 percent median forecast in a Bloomberg News survey of 21 economists.
The U.S. economy probably grew an annualized 2.8 percent in the third quarter, according to the median forecast of 62 economists. The Commerce Department will publish that data at 8:30 a.m. in Washington.
Construction jumped 1.9 percent, compared with a previous estimate of a 1.1 percent drop, the statistics office said. That offset bigger contractions in services and industrial production.
Travis Perkins Plc, the U.K. building-materials supplier that owns the Wickes home-improvement chain, said Dec. 17 it expects earnings for 2009 to be “at the upper end” of analyst estimates as spending on do-it-yourself projects aided sales.
Fixed investment increased 2.2 percent, instead of the 0.3 percent drop previously measured. Government spending rose 0.3 percent and consumer spending increased 0.1 percent, the statistics office said.
Election Looming
Prime Minister Gordon Brown is trying to revive the economy and rebuild support in time for an election which he must call by June. In an Ipsos-Mori poll published in the Observer on Dec. 20, the opposition Conservatives had support of 43 percent of voters, a 17 percentage point lead over Brown’s ruling Labour Party.
The economy may already be expanding again. Bank of England policy maker Kate Barker said in an interview last week that economic growth probably resumed in the fourth quarter. Unemployment unexpectedly fell in November for the first time since February 2008.
The Royal Institution of Chartered Surveyors today forecast house prices will rise as much as 2 percent in 2010. The CBI yesterday raised its 2010 growth forecast to 1.2 percent from a previous prediction of 0.9 percent. The group said the central bank will start raising the key interest rate from a record low of 0.5 percent in the second quarter.
Barker, speaking on Dec. 15, said that the economic pickup may still lapse in 2010.
‘Bumpy’ Recovery
“I’ve always been one of the people who thought that the path of this recovery was likely to be quite bumpy and uneven,” she said. “I wouldn’t rule out the possibility that we’d see another quarter of negative growth.”
The household savings ratio, which measures the proportion of income hoarded by consumers, rose to 8.6 percent in the third quarter, the most since the first quarter of 1998, the statistics office said.
The current account gap widened to 4.7 billion pounds in the third quarter, or 1.3 percent of GDP, from 4.4 billion pounds in the previous three months, the statistics office said in a separate report today.
Stocks Rise, Bonds Drop on Economic Recovery; Carbon Declines
Dec. 21 (Bloomberg) — Stocks rallied and bonds fell, sending the difference between 2- and 10-year Treasury note yields to a record, on signs the economic rebound is gaining steam. Oil rose after attacks on facilities in Nigeria and Iraq.
The Standard & Poor’s 500 Index added 1.2 percent to 1,115.44 at 11:20 a.m. in New York. Europe’s Dow Jones Stoxx 600 Index gained 1.4 percent. The Treasury yield curve touched 281 basis points on speculation the economic rebound will fuel inflation, while the cost to protect U.S. corporate bonds from default fell to the lowest since May 2008. Carbon-permit prices tumbled as leaders agreed not to set binding emissions targets at the Copenhagen climate summit.
Optimism about the global economic recovery was bolstered as analysts advised buying shares of Alcoa Inc. and Intel Corp. on signs that demand for aluminum and computer chips is improving. The Confederation of British Industry raised its forecast for next year’s U.K. growth to 1.2 percent from 0.9 percent. U.S. consumers probably earned and spent more in November, economists said before reports later this week.
“The economy is improving and shoppers are out there, which signals confidence in that improvement,” said Stefanie Yeager, a fund manager at State College, Pennsylvania-based Vantage Investment Advisors LLC, which oversees $450 million. “People are really seeing that things are turning around. Christmas isn’t turning out to be the black mark that people thought it might be earlier in the year.”
Chipmakers Lead Gains
All 24 industries in the S&P 500 advanced, with Intel leading computer-chip stocks up 2.6 percent for the top gain. Retailers climbed 1.5 percent as a group after the National Retail Federation said last-minute shopping in the days leading up to Christmas may make up for lost weekend sales on the U.S. East Coast after record snowfalls shut stores early and kept shoppers at home.
Health insurers, led by Cigna Corp. and Aetna Inc., rose two days after the Senate announced a compromise health-care bill that dropped proposals for a government-run plan to compete with the private sector and delayed taxes on the insurance industry. Cigna and Aetna climbed at least 6 percent, while the 13-member Standard & Poor’s insurance index was up 4.4 percent.
“The bill seems fairly benign for the industry,” said Les Funtleyder, a Miller Tabak & Co. analyst in New York, in a note to clients. “A mid-2010 start date seems like it will give the companies enough time to deal with the new rules.”
Default Swaps Drop
Credit-default swaps on the Markit CDX North America Investment-Grade Index, used to speculate on the creditworthiness of 125 companies in the U.S. and Canada or to protect against losses on their debt, declined 1.5 basis points to 87 basis points, according to broker Phoenix Partners Group. The index fell to its lowest since May 2, 2008, according to CMA DataVision.
The MSCI World Index of 23 developed nations’ stocks advanced 1 percent. Safran SA climbed 3.8 percent in Paris after winning a $5 billion contract to supply engines for China’s first narrowbody aircraft. Natixis SA added 3.6 percent after the French bank said it will be profitable in the fourth quarter.
The MSCI Asia Pacific Index fell 0.3 percent, as Hong Kong- listed property developers and insurers declined on concern China will do more to curb real-estate speculation. Soho China Ltd., the biggest developer in Beijing’s central business district, dropped 4.5 percent and Poly (Hong Kong) Investment Ltd. lost 6.1 percent.
Carbon Permits Tumble
European Union carbon permits fell the most since February on the European Climate Exchange. Carbon-dioxide allowances for delivery in December 2010 fell as much as 8.7 percent to 12.40 euros a metric ton.
The U.S., China, India and other nations attending the two- week Copenhagen summit that ended at the weekend agreed to voluntary, rather than binding, targets to reduce emissions. The accord isn’t enough to boost demand for permits, said Trevor Sikorski, an emissions analyst at Barclays Capital in London.
The dollar traded near a three-month high against major counterparts. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against currencies including the euro, yen, pound and franc, has increased 3.8 percent this month to 77.687, within 1 percent of its three-month high of 78.141 reached on Dec. 18.
The dollar traded at $1.4318 per euro, compared with $1.4338 on Dec. 18, when it appreciated to $1.4262, the strongest level since Sept. 4. The yen depreciated 0.4 percent to 130.20 per euro, from 129.75.
Oil Rallies
Crude oil rallied as much as 1.3 percent to $74.32 a barrel in New York. Nigeria’s main militant group claimed its first assault on oil infrastructure in the country in five months, while Iraq shut its northern export pipeline to Turkey after an explosion damaged the link. OPEC, meeting in Angola tomorrow, said it expects to hold production targets.
Nickel rallied 4.8 percent to $17,925 a metric ton on the London Metal Exchange as Russia’s government decided to reimpose a 5 percent tax on nickel exports that was suspended in January. Russia is home to OAO GMK Norilsk Nickel, the world’s largest producer of the stainless-steel ingredient.
Copper for three- month delivery added 1.7 percent to $6,960 a ton, the first gain in three days.
The yield on the German 10-year bund, Europe’s benchmark government security, climbed five basis points to 3.18 percent. Greece’s bonds fell for a third day, pushing the 10-year yield 16 basis points higher to 5.94 percent to its highest level since March.
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Binary Options Game Plan for USD/CAD 12/08/09
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