Fewer US jobs cut; policy-makers say worst past

Fewer US jobs cut; policy-makers say worst past
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First Published: Sat, Jun 06 2009. 11 06 AM IST
Updated: Sat, Jun 06 2009. 11 06 AM IST
New York/London: US employers last month cut the fewest jobs since September and international policy-makers said the worst of the downturn may be over as more positive corporate news popped up around the globe.
Data showing US nonfarm payrolls fell by 345,000 in May came amid optimistic signals from the International Monetary Fund and the Bank of Japan.
The fall in US jobs was far less both than the expected 520,000 drop and the revised 504,000 reduction in April.
“The light at the end of the tunnel just got a lot brighter,” said Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts. “May’s employment report brings clear evidence that the labor market is beginning to stabilize.”
Tempering the optimism, however, the US unemployment rate rose to 9.4% - the highest since July 1983 - due to the job cuts and a surge in new labor force entrants.
US stocks closed slightly higher after a choppy day of trading. The Dow Jones industrials average was supported by Wal-Mart Stores Inc’s new $15 billion stock buyback program.
European stocks finished higher.
Even before the data, policy-makers held out hope for the world economy.
“The global economy has not hit bottom yet, but the worst of the slowdown is over,” the International Monetary Fund’s first deputy managing director, John Lipsky, said in Russia.
Bank of Japan sources said the central bank was considering upgrading its view on the economy because of improved exports and output. The bank said last month the economy was worsening, but its board is expected to weigh whether to upgrade that view at a meeting on 15-16 June.
The IMF is expected to release a report on Monday saying the euro zone does not need new stimulus measures, a euro zone source said.
Russian President Dmitry Medvedev told a conference in St Petersburg that the global economy had avoided the “worst-case scenario” but added: “It is too early to crack open the champagne.”
Washington will be in focus next week, when the Federal Reserve names the first batch of big banks given the green light to repay funds from the $700 billion Troubled Asset Relief Program.
In Britain, ranked by the World Bank as the world’s fifth-biggest economy by gross domestic product in 2007, its latest available figures, Prime Minister Gordon Brown reshuffled his government to stave off calls for an early general election.
Sterling fell against the euro and the dollar, although it recovered slightly on news that Britain’s finance minister, Alistair Darling, would keep his job.
Worries about Eastern Europe were fanned by calls from Polish and Swedish officials for swift action to help Latvia to prevent its economic crisis from spilling over into other countries in Europe.
The Baltic state, facing an economic contraction of up to 20% this year, is struggling to avoid a currency devaluation that would hammer exposed Swedish banks and reignite worries over Eastern Europe’s prospects.
Positive corporate signs
Corporate news offered some indications of a recovery.
Wal-Mart, the world’s largest retailer, sent a bullish signal about its prospects with its new stock buyback program.
“Your balance sheet today is stronger than a year ago,” Wal-Mart chief financial officer Tom Schoewe told attendees at the company’s annual meeting. “How many companies ... could make that statement?”
Rio Tinto said it was ditching a planned tie-up with China’s Chinalco that had been driven by fears a prolonged economic slump would make Rio’s debt burden unsustainable.
Britain’s Carphone Warehouse, Europe’s biggest mobile phone retailer, said it expected to see signs of a consumer recovery by the end of this year.
Japan’s Canon Inc, the world’s largest digital camera maker, revived plans to build a $180 million factory as demand holds firm for its high-end single-lens reflex cameras.
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First Published: Sat, Jun 06 2009. 11 06 AM IST
More Topics: Financial | US | Jobs | Unemployment | Economy |