A tepid recovery is expected by year-end in the United States and in Europe, as unemployment remains high and consumes slow. The U.S. dollar has found important support lines at current levels. A rebound is possible over the short term, although the longer term picture should remain bearish.
U.S.: Unemployment is now the big challenge
The economic recovery is unfolding tepidly in the United States, albeit some improvements are expected by year end, as the government¡¦s program of about USD 1 billion to support the auto industry will be fully operative. Nevertheless, the large contraction in consumes would again increase savings, about 7% of the disposable income in May, while the jobless rate could stay near the highs for the first part of 2010. In June, payroll employment declined 467,000 (-370,000 expected) from May¡¦s down move of -322,000 and April¡¦s -519,000. As a result the unemployment rate rose to 9.50% from 9.40% the previous month. The decline covered most of the sectors with the goods producing industry loosing 223,000 jobs and the service industry giving up 244,000 positions. The average hourly earning dropped to 2.7% in June from 3.0% in May. The data was just a confirmation of the June ADP employment report, based upon private sector numbers from 500,000 firms, which showed a loss of 473,000 jobs (-400,000 expected) from May¡¦s ¡V 485,000 and April -518,000.
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