US job growth cools slightly in December

Updated 04 January 2013
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US job growth cools slightly in December

WASHINGTON: The pace of hiring by US employers eased slightly in December, pointing to a lackluster pace of economic growth that was unable to make further inroads in the country's still high unemployment rate.
Payrolls outside the farming sector grew 155,000 last month, the Labor Department said yesterday. That was in line with analysts' expectations and slightly below the revised gain of 161,000 reported for November.
Gains in employment were distributed broadly throughout the economy, from manufacturing and construction to health care.
That should reinforce expectations of 2 percent economic growth this year, unlikely to quickly bring down the unemployment rate or make the US Federal Reserve rethink its easy-money policies, which have been propping up the recovery.
"The US economy is just muddling through," said Tom di Galoma, managing director at Navigate Advisors in Stamford, Connecticut.
The jobless rate held steady at 7.8 percent in December, down nearly a percentage point from a year earlier but still well above the average rate over the last 60 years of about 6 percent.
The Labor Department raised its estimate for the unemployment rate in November by a tenth of a point to 7.8 percent, citing a slight change in the labor market's seasonal swings.
Most economists expect the US economy will be held back by tax hikes this year as well as by weak spending by households and businesses, which are still trying to reduce their debt burdens.
Yesterday's data nonetheless gave signals of some momentum in the labor market's recovery from the 2007-09 recession. Many economists had expected December's payroll gains to be padded by one-time factors like the recovery from a mammoth storm that hit the East Coast in late October.
The government had said last month the storm had no substantial impact on the November data, and many economists expected the government yesterday to recant by revising downward its estimate for payroll gains in November. Instead, the government revised November payrolls upward by 15,000.
Average hourly earnings rose 0.3 percent last month, slightly more than analysts had expected, while the length of the average workweek was unchanged.
"This shows the economy is chugging along, with payroll gains at about the average it has been over the past year," Tom Porcelli, an economist at RBC Capital Markets in New York.
US S&P stock index futures added to gains after the data, while US Treasuries prices erased most of their losses.
Despite the signs of some momentum in hiring, a wave of government spending cuts due to begin around March loom over the economy.
Many economic forecasts assume the cuts — which would hit the military, education and other areas — will ultimately be pushed into next year as part of a deal sought by lawmakers to reduce gradually the government's debt burden.
Initially, the cuts were planned to have begun this month as part of a $ 600 billion austerity package that also included tax hikes.
Hiring in December may have been slowed by uncertainty over the timing of the austerity.
"Companies were very worried about the fiscal cliff, so it's a good number that they were still hiring," said Yelena Shulyatyeva, an economist at BNP Paribas in New York.
Congress this week passed legislation to avoid most of the tax hikes and postpone the spending cuts.
Even with the last-minute deal to avoid much of the "fiscal cliff," most workers will see their take-home pay reduced this month as a two-year cut in payroll taxes expires.
Austerity already held back the US economy in 2012. In December, government payrolls shrank by 13,000.
That leaves the Fed's efforts to lower borrowing costs as the main program for stimulating the economy.
The Fed has kept interest rates near zero since 2008, and in September promised open-ended bond purchases to support lending further. On Thursday, however, minutes from the Fed's December policy review pointed to rising concerns over how the asset purchases will affect financial markets.


Airbus warns could leave Britain if no Brexit deal

Updated 22 June 2018
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Airbus warns could leave Britain if no Brexit deal

  • Industry analysts say Airbus would be unlikely to pull out of the UK abruptly because of long lead times and waiting lists for its planes
  • Airbus, which makes wings for all its passenger jets in the UK, said that leaving both the EU’s single market and customs union immediately

PARIS: European aviation giant Airbus warned Thursday it could be forced to pull out of the UK if Britain leaves the European Union without a deal.
In a Brexit risk assessment, Airbus said Britain withdrawing from the EU without a deal “would lead to severe disruption and interruption of UK production.”
“This scenario would force Airbus to reconsider its investments in the UK, and its long-term footprint in the country, severely undermining UK efforts to keep a competitive and innovative aerospace industry, developing high value jobs and competences,” it warned.
“Put simply, a no deal scenario directly threatens Airbus’ future in the UK,” Tom Williams, chief operating officer of Airbus Commercial Aircraft, said in a statement.
In its risk assessment, Airbus said under a “no deal” scenario, delays and disruptions to its production could cost it up to one billion euros ($1.2 billion) a week in lost turnover.
It said a no-deal Brexit “would be catastrophic” for the aviation group.
Airbus employs 14,000 people at more than 25 sites in Britain, where it manufactures the wings of its aircraft.
“In any scenario, Brexit has severe negative consequences for the UK aerospace industry and Airbus in particular,” Williams said.
“While Airbus understands that the political process must go on, as a responsible business we require immediate details on the pragmatic steps that should be taken to operate competitively,” he said.
“Without these, Airbus believes that the impacts on our UK operations could be significant. We have sought to highlight our concerns over the past 12 months, without success.”
On the future trade relationship between Britain and the EU, Airbus said the current transition period, which runs until December 2020, “is too short for the EU and UK Governments to agree the outstanding issues, and too short for Airbus to implement the required changes with its extensive supply chain.”
“In this scenario, Airbus would carefully monitor any new investments in the UK and refrain from extending the UK suppliers/partners base.”
Britain is due to leave the European Union in March 2019 but continue the current trading arrangements during the transition phase to December 2020 to give time for the two sides to agree the terms of a new partnership.