Job woes cast doubt on US recovery hopes

  • Business
  • Thursday, 02 Oct 2003

NEW YORK: Growth at US Midwest businesses slowed sharply in September while consumer confidence plunged to the lowest level since the start of the Iraq war, according to two reports just released. 

Financial markets reacted harshly, with major stock gauges sliding and safe-haven Treasuries soaring on Tuesday after the surprisingly poor data raised doubts about the US recovery’s staying power. 

“The Chicago Purchasing Managers’ (index) fell off a cliff. It is an ugly report,” said Deutsche Bank Securities economist Cary Leahey. 

The news also stoked speculation the US Federal Reserve may cut its target interest rate further from a 45-year low of 1% in coming months. Fed officials have said they could cut rates if layoffs mount despite faster economic growth. 

After a brief spurt of August hiring, Chicago area companies stepped up layoffs in September, according to the National Association of Purchasing Management.  

A separate report from the Conference Board showed the “jobs hard to get” gauge in its Consumer Confidence Survey – seen as a good indicator of labour market trends – jumped to a nearly 10-year high. 

Analysts and investors will now be looking closely at the upcoming report on national manufacturing from the Institute for Supply Management and the Labour Department’s payrolls report for confirmation of the souring outlook. – Reuters  

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