Obama momentum hit by worsening jobs figures
THE US President, Barack Obama, a day after getting his highest approval rating in more than a year, was confronted by a worse-than-expected slowdown in the job market that threatened to undercut enthusiasm for his re-election.
THE US President, Barack Obama, a day after getting his highest approval rating in more than a year, was confronted by a worse-than-expected slowdown in the job market that threatened to undercut enthusiasm for his re-election.The figures showed the economy added 96,000 jobs in August, down from a revised gain of 141,000 in July and fewer than forecast. While the unemployment rate fell to 8.1 per cent from 8.3 per cent in July, the report showed 368,000 Americans left the job market and the share of the working-age population in the labour force slumped to 63.5 per cent, the lowest since 1981.The numbers also sparked renewed speculation about additional stimulus from the Federal Reserve, which holds its next meeting this week. The Federal Reserve chairman, Ben Bernanke, said last month that the stalled labour market was "a grave concern" and threatened to "wreak structural damage on our economy that could last for many years".Dr Bernanke said stimulus options included extending the Federal Reserve pledge to hold the main interest rate near zero until at least late 2014 and buying bonds in a third round of so-called quantitative easing to reduce interest rates.The Boston Fed president, Eric Rosengren, and three other regional bank presidents have called for an "open-ended" approach to bond buying, in which the central bank would announce an amount of monthly purchases that would continue until the economy sufficiently improves.Mohamed El-Erian, co-chief investment officer of Pacific Investment Management, said job creation averaging less than 100,000 in the past three months, no growth in average hourly earnings, a decline in labour force participation and rising teenage unemployment probably would prompt the Fed to act. "Put all that together and it triggers the need for a policy response," El-Erian said.Stocks advanced with the Standard & Poor's 500 Index rising 0.4 per cent to 1437.92, its highest level since January 2008, and the Dow Jones Industrial Average closed at its highest since December 2007 amid bets the labour data will spur the Fed to act.The jobs numbers were released at a pivotal point in this year's presidential campaign, with both party conventions finished and the two candidates embarking on a two-month drive to persuade voters before the November 6 election.Jobs and the economy are the core issues in the race, and they remain a burden for Mr Obama. The unemployment rate has exceeded 8 per cent since February 2009, the longest stretch in monthly records dating to 1948, and economic growth this year is below normal.