Reuters/New York


Job seekers visit representatives at a job fair in Chicago, Illinois, US. Private employers added 91,000 positions last month, broadly in line with expectations
The pace of US private sector job growth slowed in August for the second month in a row, but factory activity in the Chicago area continued to expand, suggesting the economy would dodge a recession.
Private employers added 91,000 positions last month, payrolls processor ADP National Employment said yesterday, broadly in line with expectations.
Separately, the Institute for Supply Management-Chicago said its business barometer fell to 56.5 in August, the lowest since November 2009, from 58.8 the month before.
Still, it was better than economists’ forecasts for a reading of 53.5, and suggested that factory activity might not be slowing as fast as had been flagged by other regional manufacturing surveys.
Orders for manufactured goods increased 2.4% in July after a 0.4% fall in June, the Commerce Department said in a third report.
“For those of us who don’t believe the economy is in a free fall, we have got some support, said David Resler, chief economist at Nomura Securities International in New York.
“It is consistent with the belief ... that manufacturing activity is advancing, but it is advancing unevenly across regions.”
But the Institute for Supply Management’s index of national manufacturing activity probably fell to 48.5 in August, according to a Reuters survey, from 50.9 in July. A reading below 50 indicates a contraction in manufacturing.
The August ISM survey will be published today.
Major US stock indexes added to gains after the factory data, while US government debt prices fell. The dollar rose against the yen and the euro.
The ADP figures come ahead of the US government’s much more comprehensive labour market report on Friday, which includes both public and private sector employment.
While the ADP report has a poor track record of predicting the national nonfarm employment count, it suggested that businesses had not responded to the sharp stock market sell-off and loss of both business and consumer confidence this month by holding back on hiring.
Nonfarm payrolls are expected to have increased 75,000, according to a Reuters survey, slowing from July’s 117,000 rise. The anticipated slowdown in payrolls growth will largely be the result of a strike at Verizon Communications.
“The non-farm payrolls figure is still likely to be a bit weaker because it will be affected by the strike by 45,000 Verizon workers last month,” said Paul Ashworth, chief US economist at Capital Economics in Toronto.
“The ADP survey counts people as employed as long as they were on the payroll, whereas the official payroll survey only counts people as employed if they were paid during their normal pay period that includes the 12th of the month.”
While fears the economy is falling back into recession have increased this month, some of the recent data has been consistent with a slow-growth scenario rather than a contraction.
Slower than expected economic growth has fueled speculation the Federal Reserve could launch another round of bond buying - known as quantitative easing—but such a move would likely face political opposition both domestically and abroad.
A separate report earlier yesterday showed the number of planned layoffs at US firms declined in August after rising for three months in a row, but the cuts were still up sharply from a year ago amid government job losses.
Employers announced 51,114 planned job cuts, down 23% from 66,414 in July, according to the report from consultants Challenger, Gray & Christmas, Inc July’s figure had been a 16-month high.
The Mortgage Bankers Association said yesterday applications for US home mortgages tumbled last week as demand for refinancing sagged for the second week in a row.
‘CEOs earned more than tax bills of companies’
Twenty-five of the nation’s best-paid chief executive officers earned more in salary and other compensation in 2010 than their companies’ federal income tax expenses as disclosed in public filings, according to a report by the Institute for Policy Studies.
The Washington-based nonprofit group’s report, released yesterday, examined 100 publicly traded US Corps with the highest-paid CEOs. It found that companies whose CEOs’ compensation exceeded reported tax expense in 2010 had average global profits of $1.9bn.
Companies in this group, according to the report, included EBay Inc, General Electric Co, Verizon Communications Inc, Boeing Co and Dow Chemical Co.
The tax expense reported in annual financial statements can differ from actual tax payments, which are confidential, for a variety of reasons.
The group said its findings underscore the need for an overhaul of the US tax code that would reduce the number of tax strategies available to companies, especially their ability to lower tax payments by parking profits overseas.
“Tax reform has to close up some of these loopholes and the offshore system,” Chuck Collins, one of the report’s authors, said in an interview. “We might be able to lower the overall corporate rate by broadening the base.”