US continues to shed jobs

In the US, the week’s focus was Friday’s labour report that employment dropped by 95,000 workers in September, after a revised 57,000 decrease in August. However, private payrolls, which exclude government agencies, climbed by 64,000, while the unemployment rate held at 9.6%.

Meanwhile, orders for US capital goods rose for a second consecutive month in August, showing signs that the recovery is stabilising after a second-quarter slowdown. Bookings for non-military capital goods excluding planes increased 5.1%, the biggest gain since March.

In a separate report, the number of contracts to buy previously owned houses rose 4.3%, well above economists’ expectations. This could indicate that the housing market is steadying after plunging in the months following the expiry of the housing tax credit.

The Institute of Supply Management non-manufacturing index was better than expected for September rising to 53.2 from 51.5 a month earlier. In the EU-16, the European Central Bank left interest rates unchanged at 1%. ECB president Jean-Claude Trichet said interest rates in the 16-country eurozone are “appropriate”, indicating no immediate need to ease monetary policy.

Retail sales in the euro area unexpectedly fell in August by 0.4%, against an expected 0.2% increase. The recovery in the eurozone’s dominant services sector dropped in September as declines in Spain and Ireland offset resilient performances in Germany and France. The Purchasing Managers’ Index (PMI) for services dropped to a six-month low in September to 54.1, from 55.9 in August. Meanwhile, Germany’s trade surplus with the rest of the world was €11.7 billion in August, down from €12.6bn in July and well below the €12.5bn forecast. Exports fell by 0.4% from July levels, while imports rose 0.9%.

In the UK, the Bank of England left interest rates unchanged at 0.5% and kept its asset-buying program at £200bn. Manufacturing output rose by 0.3%, its fastest rate in over 15 years, largely driven by food and transport equipment, lifting the annual rate of output to 6% from an upwardly revised 5% in July.

British services activity growth unexpectedly accelerated in September from a 16-month low. The services PMI rose to 52.8 from 51.3 a month earlier. Likewise, construction activity picked up in September, as the construction PMI rose to 53.8 from 52.1 in August.

House prices plunged by a record 3.6% in September, the biggest drop since records began in 1983.

This article has been prepared by Bank of Valletta plc for your general information only.