US unemployment hits 26-year high

WASHINGTON: Unemployment in the US has hit a 26-year high, with 9.7 per cent of the workforce out of a job, official figures showed yesterday, though the pace of layoffs slowed in August, raising hopes that the worst of the recession is over.
American businesses cut 216,000 staff last month, according to the closely watched non-farm payrolls figures, released by the labour department. That was the lowest number
of job losses in a year:
in January, almost three quarters of a million people lost their jobs.
In total, 6.9 million Americans have now lost their jobs since the downturn began in late 2007. In August, the heaviest toll came in the construction sector, where 65,000 jobs went while manufacturers laid off 63,000 people.
The latest news boosted hopes that the US economy is finally on the mend. Barack Obama is under pressure to show that a turnaround is under way, after battling to win approval for his $800 billion fiscal stimulus package.
“Although the job losses continued in major industry sectors in August, the declines have moderated in recent months,” the labour department said. However, some economists warned that US firms need to start creating jobs to ensure long-term recovery.
John Canally, an analyst at LPL Financial in Boston, said: “The tension between now and the end of the year lies in the question of whether, after the support provided by the government’s stimulus package, the private sector can stop shedding jobs in time to help the economy stay on a sustainable recovery.”
Dominique Strauss-Kahn, head of the IMF, made a speech in Berlin yesterday to warn that the global economic crisis has moved into a third wave — from finance, to the real economy, to unemployment. “We expect unemployment to continue rising through next year, as economic growth falls short of potential,” he said.

US unemployment rate 9.7%

WASHINGTON: The US unemployment rate jumped to 9.7 percent in August as 216,000 jobs were lost, the government said Friday in a report suggesting steadying labor market conditions.
The jobless rate rose three-tenths of a point to the highest level since June 1983, but the data nonetheless showed an easing of the massive pace of job losses in an economy struggling to emerge from recession.
The Labor Department report, seen as one of the best indicators of economic momentum, showed job losses narrowed considerably. Revised rate showed 276,000 jobs lost in July and 463,000 in June, higher than prior estimates of 247,00 and 443,000, respectively.
"The good news is job losses are slowing. The bad news is joblessness continues to mount," said Sal Guatieri, economist at BMO Capital Markets.
"Our sense is job losses may continue for a couple of more months, which can only act to impede a consumer-led recovery."
The consensus expectation was for 230,000 job losses and an unemployment rate of 9.5 percent in August.
Mark Vitner at Wells Fargo Securities said the figures are consistent with economic recovery but that more job losses are likely in the coming months.
"We are seeing a little bit of improvement in the rate of jobs lost but 216,00 is still a significant loss," he said.
"If you extend the trend you would think it would turn positive in the next six months."
The civilian labor force rose by 73,000 in August, suggesting more people are returning to the workforce to seek employment in anticipation of better conditions.
The US economy shrank at a 1.0 percent annual pace in the second quarter, reflecting an easing of the deep recession that led to a 6.4 percent pace of decline in the first quarter.
Many economists expect the world's biggest economy to show growth in the current quarter although difficult labor market conditions could crimp consumer spending and dampen any recovery.
Sophia Koropeckyj at Moody's Economy.com said unemployment could well top 10 percent in 2010.
"Payroll gains are not expected until the second half of 2010," she said.
"As consumer and business confidence improves, more workers will start looking for jobs again and more new entrants will step into the fray. This will drive the unemployment rate higher; it is expected to peak above 10 percent in mid-2010."
The Labor Department's August data showed a loss of 136,000 jobs in the goods-producing sectors including 63,000 in manufacturing and 65,000 in construction.
The services sector shed 80,000 jobs including 10,000 in retail.
The only segment showing growth was education and health care, with 52,000 jobs added.
The average workweek in the private sector was unchanged at 33.1 hours. but overall aggregate hours worked fell 0.3 percent.
Average hourly earnings of private production and nonsupervisory workers rose 0.3 percent.

Trade chiefs agree on new Doha talks in 'breakthrough'

NEW DELHI: WTO ministers agreed Friday to resume high-level negotiations to clinch a new global free-trade pact, but despite talk of a "breakthrough" there were words of caution about the hard work ahead.

Indian Trade Minister Anand Sharma said ministers from over 35 countries meeting here for two days of talks had committed to resuming top-level negotiations in mid-September after they collapsed in July 2008.

"There has been a breakthrough," he told reporters. "The impasse in resuming negotiations has been broken."

Chief negotiators for World Trade Organisation (WTO) members would meet in Geneva on September 14 to restart negotiations, Sharma said, adding there was "a unanimous affirmation" of the need to clinch a deal after years of delay.

But US Trade Representative Ron Kirk took a step back from the 2010 deadline for a pact set in July by a meeting of top industrial and emerging nations, including the United States, for the repeatedly stalled Doha Round to conclude.

"We have missed so many deadlines," Kirk told a separate news conference at which he reaffirmed Washington's commitment to completing the round.

"Substance will drive this process, not setting deadlines and timelines," he said. "Our leaders have set as a stretch goal 2010" but that will require a "lot of hard work."

Since a failed attempt to organise a small ministerial meeting last December, the Doha Round has been restricted to low-level contacts in Geneva.

Elections in the key countries of the United States, India and most recently Japan made negotiations difficult to resume earlier, WTO observers say.

Sharma said it was too early to talk about an "end-game" for a pact, given differences on key issues of farm subsidies in rich countries and industrial product tariffs in developing nations.

"We have a long way to travel before we can safely say we are in the end-game," he said.

The Doha Round began in 2001 with the aim of creating a free-trade deal that would boost global commerce to help developing countries. Deadlock between the major trading blocs has dashed repeated attempts to forge a pact.

"Is conclusion in 2010 doable? Yes. Will it be done? I don't know," said WTO director general Pascal Lamy. "There remain tough nuts to crack in these negotiations."

India's disagreement with the United States over subsidy protection for poor farmers was widely blamed for the collapse of talks in 2008 in Geneva.

But the installation of new governments in Washington and India has fuelled hope of success sometime next year. India took the initiative in setting up the New Delhi meeting, seeking to kickstart the negotiations by getting ministers to plan a roadmap for a deal.

The world economic slump has given new impetus for an agreement that would fuel trade and could bolster global gross domestic product by up to 700 billion dollars a year, according to a think-tank report.

"This crisis actually gives all members a stronger sense of urgency" to conclude the Doha Round, China's Commerce Minister Chen Deming said Thursday, calling a deal the best bulwark against protectionism.

The Indian talks were seen as also laying ground for further progress at a meeting of leaders of the Group of 20 rich and emerging nations in Pittsburgh later this month.

Developing countries such as India, which has 235 million farmers, have been hesitant to open their markets to what they fear will be cheap crops from abroad.

Developed nations such as the United States are reluctant to abandon huge, popular agricultural subsidies and want developing countries to open their markets more to industrial products.

As ministers opened talks Thursday, thousands of farmers and social activists blocked a main New Delhi thoroughfare to demand India ditch Doha.

"The rich countries with their subsidies will destroy Indian farmers," Ajmer Singh Gill, a senior leader of Indian farm group Bharat Kisan Union, said.