09/04/2008 (9:06 pm)
U.S. services, productivity up but job market weak
The dominant U.S. service sector improved last month and businesses boosted productivity in the second quarter but the labor market continues to struggle, government reports on Thursday showed.
The Labor Department said business productivity surged at a revised 4.3 percent annual rate, nearly double the 2.2 percent gain previously reported and well ahead of forecasts for a 3.5 percent increase.
“We’re not in an ugly environment but we’re not in a great environment either,” said Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia.
Companies have cut payrolls in each of the first seven months this year and an intently awaited report on Friday is expected to show that they did so again in August.
A separate report from the Labor Department confirmed a steadily weakening labor market as the number of U.S. workers filing new claims for jobless benefits jumped by 15,000 last week to a seasonally adjusted 444,000.
That was much higher than the 425,000 claims that analysts surveyed by Reuters had anticipated and sent major U.S payday advance online. stock indexes down 2 percent. But prices for U.S. Treasury debt extended gains as investors bet the Federal Reserve would keep interest rates low.
Another report from ADP Employer Services on Thursday showed private employers cut 33,000 jobs in August, which some analysts said increased chances that Friday’s payroll report from the Labor Department will be weak.
The Institute for Supply Management said its non-manufacturing index rose to 50.6 for August from July’s 49.5. A reading above 50 signals expansion. The ISM report showed inflation pressures in the service sector moderated but the jobs picture also deteriorated.
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