US companies cut 532,000 jobs in May/US jobless claims ease for third week running

US companies cut 532,000 jobs in May
By Sarah O’Connor in Washington
Copyright The Financial Times Limited 2009
Published: June 3 2009 15:45 | Last updated: June 3 2009 15:45
http://www.ft.com/cms/s/0/f4ab8182-5049-11de-9530-00144feabdc0.html


US companies cut more than half a million jobs last month as the recession continued to chip away at the country’s labour market, while the service sector shrank more than expected.

Private companies cut 532,000 jobs from their payrolls in May, according to a survey by ADP Employer Services. Although that was fewer than the revised 545,000 jobs slashed in April, the number was worse than many predicted and pushed shares lower on Wednesday morning.

“This is a weak report [but] you could argue at least it was better than it was a few months back,” said Joel Prakken, chairman of Macroeconomic Advisers, which jointly produces the ADP survey. Earlier in the year, payrolls were consistently being cut by more than 600,000 each month. “That improvement, if it sticks and even improves further, is consistent with a notion that a freefall in the economy is likely over,” Mr Prakken added.

Figures from the Institute of Supply Management showed that the US service sector – which represents about 80 per cent of economic activity in the US – was still contracting in May, albeit at a slightly slower pace.

The index rose to 44, from 43.7 in April. Any number below 50 indicates contraction, and economists had predicted a better figure of 45.

”It kind of fits with all the other news we’re getting: things are less bad but they’re not yet growing,” said Jonathan Basile, an economist at Credit Suisse. “It’s encouraging to see this stabilisation process start to take hold, but at the same time the weakness does persist. These are still indications that we’re not totally out of the woods yet.”

Companies have responded to such shrinking activity by cutting jobs. Last month the number of manufacturing jobs dropped by 149,000, while service providers cut 265,000 workers.

The ADP report is closely watched because it comes two days ahead of the government’s official payroll and unemployment figures for May. In April, unemployment climbed to 8.9 per cent while payrolls dropped 539,000. Economists expect the unemployment rate to punch through 9 per cent when it is released on Friday.



US jobless claims ease for third week running- US worker productivity jumps during first quarter
By Alan Rappeport in New York
Copyright The Financial Times Limited 2009
Published: June 4 2009 14:31 | Last updated: June 4 2009 14:31
http://www.ft.com/cms/s/0/9a556f5a-50fc-11de-8922-00144feabdc0.html


The number of US workers claiming unemployment benefits for the first time eased last week, official figures showed on Thursday, lifting hopes that the pace of job losses may be slowing.

New jobless claims fell by 4,000 to 621,000 in the week ending May 30, the labour department said on Thursday. The decline was in line with economists’ expectations and marked the third consecutive week with fewer new claims.

The less volatile four-week average for new claims rose by 4,000 to 631,250, however.

The number of Americans still claiming unemployment fell back for the first time since the start of the year. Continuing claims declined by 15,000 to 6.735m from a revised 6.75m the week before. Meanwhile the insured unemployment rate remained unchanged at 5 per cent.

“Claims tend to support a view that the increase in joblessness is well beyond its peak,” said Alan Ruskin, strategist at RBS Greenwich Capital.

The US unemployment rate remains historically high, squeezing more output out of those workers who still have jobs. A separate labour department report on Thursday showed that during the first quarter productivity of employees in non-farm businesses was up by 1.6 per cent. The increase was twice as much as projections from last month and was due to a 9 per cent drop in hours worked, the steepest fall since 1975.

“Feeble green shoots don’t stop companies laying off staff, still less actually starting to hire again,” said Ian Sheperdson, chief US economist at High Frequency Economics. “Given the massive drop in GDP, these data showing companies controlling costs very aggressively indeed.”

Thursday’s figures come a day after a survey by ADP Employer Services found that US companies cut 532,000 jobs from their payrolls in May. That report set the stage for Friday, when the government’s official payroll and unemployment figures for May will be revealed.

In April, unemployment climbed to 8.9 per cent while payrolls dropped 539,000. Economists expect the unemployment rate to breach the 9 per cent mark.