US employment growth ground to a halt last month, reviving recession fears and piling pressure on both US President Barack Obama and the US Federal Reserve to provide more stimulus to aid the frail economy.
For the first time in nearly a year, the economy failed to create new jobs on a net basis, according to the Labor Department’s monthly nonfarm payrolls survey on Friday.
Economists had expected nonfarm employment to rise 75,000 last month, but they cautioned against viewing the data as a surefire sign of recession.
Photo: AFP
A worsening debt crisis in Europe and an acrimonious political fight over the US government budget and debt, which led Standard & Poor’s to strip the country of its “AAA” credit rating, ignited a massive stock market sell-off last month and sent business and consumer confidence tumbling.
“The economy is struggling against stiff headwinds, which appear to have intensified in recent months,” TD Securities senior macro strategist Millan Mulraine said in New York. “While it has clearly not fallen off the cliff, there is little to suggest it is anywhere close to regaining its momentum.”
Investors fled riskier assets on the news, sending stocks tumbling, pushing up the price of gold, and lowering US Treasury bond yields.
Employment was dampened by 45,000 striking workers at Verizon Communications. Those workers have since returned to work and will be counted as on the payroll this month.
However, even taking that into account, the report was largely bleak. The unemployment rate, however, held at 9.1 percent as a survey of households found both job growth and, for the first time in a year, an expanding labor force.
With the jobless rate stuck above 9 percent and confidence collapsing, Obama faces pressure to come up with ways to spur job creation. The health of the labor market could determine whether he wins re-election next year.
Obama will lay out a new jobs plan in a speech to the nation on Thursday, and White House advisers said the data underscored a need for action.
“He will be very specific about what we can do that can have a meaningful impact on job growth in the economy right away,” said Gene Sperling, a top economic adviser to Obama.
Despite massive cash injections by both the government and the Fed, sustainable job growth has eluded the economy.
The data could strengthen the hand of officials at the US Fed who wanted to do more to help the sputtering economy last month. The economy needs to generate about 150,000 jobs each month just to keep the unemployment rate steady over time.
The central bank, which meets on Sept. 20 and Sept. 21, cut overnight interest rates to near zero in December 2008 and has bought US$2.3 trillion in securities to inject cash into the economy.
Despite simmering inflation pressures, many economists expect the Fed to launch a third round of bond buying soon to put downward pressure on long-term rates, partly because the US government appears intent on belt-tightening.
While employment was held back by the Verizon strike, the impact was offset somewhat by the return of 23,000 public employees in Minnesota after a partial government shutdown.
Stripping out both of those factors, employment would have expanded by more than 20,000 jobs last month and, without the strike, private payrolls would have increased by 62,000, instead of a paltry 17,000.
Still, the overall tenor of the report was decidedly weak.
Employers created a combined 58,000 fewer jobs in June and July than previously thought, and the length of the average workweek fell 0.1 hour to 34.2 hours, the fewest since January. In addition, average hourly earnings dropped US$0.03.
About 43 percent of the 14 million Americans unemployed last month had been out of work for at least six months. The jobless rate would have been 16.2 percent if people who want to work, but have given up looking for jobs and those working only part time for economic reasons were counted.
Although hiring cooled, fairly steady readings on claims for jobless benefits, relatively strong consumer spending and continued demand for manufactured goods offer hope the economy will avoid recession.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”