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US unemployment better than feared but offer little cheer for Obama
by Sarah Miloudi on Nov 22, 2012 at 09:38
Barack Obama may have drawn a sigh of relief as yesterday's manufacturing and employment data poured in.
Cheerier than expected, the number of Americans out of work dropped by 41,000 last week, while activity in factories picked up so much so that the US PMI for November hit a five-month high.
The two releases represent the first round of data since Democrat Obama saw off his Republican rival, Mitt Romney, in the presidential showdown and in the case of US unemployment, the number defied analysts expectations.
But Obama is still far from getting a pat on the back for his efforts to shore up the US economy.
While Wednesday's figures were enough to stem the impact of more woeful news from the eurozone, they did little to dampen fears about future growth.
'Output is probably flat,' said Capital Economics, arguing that if the impact of Hurricane Sandy, which struck America's northwest on October 29, is stripped out then the US outlook is still weak.
Although the rise in the flash PMI estimate for November to 52.4 from 51.3 takes activity back to its summer peak, it 'probably overplays' the current health of the industry, the consultancy added.
Even though both the output and input portions of the reading rose, Markit, which compiled the data, said, noted the impact of Sandy, saying the devastating storm resulted in some new work.
Similar noises were heard over at the US Labor Department. It said because of the hurricane it was still receiving excess jobless claims.
This means that the analysts' consensus before the data was released, that the weekly unemployment picture looked more like 423,000 new individuals out of work versus the actual 410,000 reading, could well have been right.
'Stripping out the short-term boost from Sandy, output is probably flat. That’s unlikely to change much when the global economy is set to remain weak,' Capital's Paul Dales added.
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As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.
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