Arab Today, arab today us jobs data seen as test of economy\s momentum
Last Updated : GMT 03:54:11
Arab Today, arab today
Arab Today, arab today

US jobs data seen as test of economy\'s momentum

Arab Today, arab today

Arab Today, arab today US jobs data seen as test of economy\'s momentum

New York - AFP

The US government will report May jobs numbers Friday in what could be a crucial test of the economy\'s momentum following a sluggish start to the year. The data on job creation and unemployment also will provide fodder for the presidential race heating up, with November elections only five months away. President Barack Obama argues that his Democratic administration pulled the economy back from the brink of another Great Depression after the 2008 Wall Street financial meltdown. But Republican foe Mitt Romney has hammered the administration on the economy, pointing to stubbornly high unemployment and insisting his small-government approach will rev up growth and crank out new jobs. Analysts forecaste that the economy added a net 150,000 jobs in May, better than April\'s meager 115,000 jobs, but still just barely keeping up with population growth in the labor force. The unemployment rate was expected to remain unchanged at 8.1 percent. In April, the jobless rate fell to 8.1 percent from 8.2 percent the previous month, mainly due to more than 300,000 workers dropping out of the labor force. When Obama took office in January 2009 during the raging financial crisis, the jobless rate stood at 7.8 percent. It peaked at 10 percent in October that year before backing down in fits and starts. Romney has pledged to lower the jobless rate to six percent if elected. The Federal Reserve, which aims for price stability and full employment, has predicted unemployment would gradually fall to as low as 7.8 percent by the end of the year. Steven Ricchiuto, chief economist at Mizuho Financial Group, said the May job numbers could spur the Fed to unleash more economic stimulus, such as another round of asset purchases, or quantitative easing. \"Should the payroll number come in below 100,000 tomorrow, then the policy risk will shift from extension of Twist to outright QE,\" he said, referring to \"Operation Twist,\" a stimulus policy in which the Fed swaps short-term bonds for longer-term Treasury securities to tamp down interest rates. Other important gauges of the economy due Friday are personal income and spending numbers for April, the first clear look at second-quarter consumer spending, and the ISM manufacturing index for May. Fresh data Thursday pointed to a tepid economy and new weakness in the labor market. The Commerce Department said the world\'s largest economy expanded at an annual rate of 1.9 percent in the first quarter, lowering its 2.2 percent estimate from the prior month. The soft patch followed a 3.0 percent growth rate in the final quarter of 2011 and highlighted the economy\'s struggle to gain traction almost three years after the Great Recession. \"Momentum in the economy has stalled with growth at about 2.0 percent, a level consistent with slower job growth ahead,\" said Chris Low at FTN Financial. Payrolls firm ADP reported private-sector employment rose by a modest 133,000 jobs in May, well below expectations, from April\'s 113,000 gain. And new claims for US unemployment benefits -- indicating the pace of layoffs -- rose by 10,000 to 383,000 in the week ending May 26, the Labor Department said. The four-week moving average also increased, for the first time in four weeks. Joel Naroff, of Naroff Economic Advisors, said the ADP data showed hiring activities by small and midsized companies had softened significantly. \"Since they create just about all the jobs, that is not good news,\" he said. Meanwhile global outplacement firm Challenger, Gray & Christmas warned that a surge in layoffs is in the pipeline. Challenger said that the nation\'s employers announced plans in May to cut 61,887 workers from their payrolls, the most since last September and up 53 percent from April\'s figure.

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