Weak Employment Growth Keeps Jobless Rate at 8.2%

Arthi Gupta
06 Jul, 2012
New York City

U.S. indexes declined after payrolls in June increased less than expected. The IMF said it is likely to lower its global growth outlook. Christopher & Banks rejected unsolicited takeover proposal.

[R]10:00 AM New York – U.S. indexes declined after payrolls in June increased less than expected. The IMF said it is likely to lower its global growth outlook. Christopher & Banks rejected unsolicited takeover proposal.[/R]

Stocks in early trading in New York declined after the latest payrolls data showed slowing economic growth.

The latest monthly employment data offered another weak growth signal as employers add just enough jobs that match population growth. The hiring slowed since March and the strong additions in the last November and December have not been matched for six months.

Economists were anticipating at least 95,000 net new jobs additions in the month. The smaller increase in payrolls by now should have overcome the early arrival of spring but the persistent weakness in jobs creation may indicate deeper problems in the economy.

The economy added 226,000 jobs in the first quarter and the growth declined to 75,000 in the second quarter. April payrolls numbers were revised lower to 68,000 from the previous estimate of 77,000 and May numbers were revised to 77,000 from the previous estimate of 69,000.

European markets edged lower a day after central banks in Europe, UK and China delivered additional monetary steps to boost their economies, as expected. Spanish yields shot up again.

ECB President Mario Draghi told reporters on Thursday that economic growth in the euro area continues to remain weak, with heightened uncertainty weighing on confidence and sentiment.

Draghi lowered the rates to historic low in the euro zone and added that the risks surrounding the economic outlook for the euro area continue to be on the downside.

The Italian government approved €4.5 billion in spending cuts for this year and also plans to save €10.5 billion in 2013 and €11 billion in 2014 by reducing expenditure.

Asian markets closed lower tracking the U.S. and European indexes.

The IMF Managing Director Christine Lagarde said in Tokyo that the outlook for the global economy had become increasingly worrying and there are signs that activity is slowing across both advanced and emerging market economies.

The IMF is expected to lower its growth forecast for the global economy on July 16. In its World Economic Outlook report released in April, the IMF had forecasted 3.5% global economic growth this year and 4.1% next year.

U.S. Non-Farm Payrolls Drop

U.S. added less than expected jobs in June, according to a report released by the Labor Department today.

Non-farm payroll employment rose 80,000 in June following an upwardly revised increase of 77,000 in May.

The unemployment rate remained unchanged at 8.2% and average earnings increased 6 cents to $23.05 an hour and average work week edged up by 0.1 hour to 34.5 hours.

Christopher & Banks Rejects Aria Offer

Christopher & Banks, a women''s specialty apparel retailer rejected Aria Partners'' unsolicited proposal to acquire all outstanding stock of the company for $1.75 per share.

The company concluded that the proposal is not in the best interests of Christopher & Banks and its stockholders.

Earnings Review

Acme Packet, Inc. ((APKT)), the delivery network solutions provider estimated second quarter total revenues between $66 million and $68 million and loss per share between 1 cent and 2 cents.

BMW AG, the luxury automaker reported record first half global sales of 900,539 vehicles, up 8.1% from the same period last year and global sales rose 4% on the year to 172,516 cars in June.

Informatica Corporation ((INFA)), the data integration software provider estimated total revenues for the second quarter between $188 million and $190 million and earnings per share between 16 cents and 17 cents.

Samsung Electronics Co., Ltd., the South Korean conglomerate estimated second quarter operating profit to surge about 79% to 6.7 trillion won or about $5.9 billion from last year and estimated first quarter of 47 trillion won, an increase of 19.2% from a year ago quarter.