User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Monday October 4, 2010 - 09:47:23 GMT
Lloyds TSB Financial Markets - www.lloydstsb.com/corporatemarkets

Share This Story:
| | Email

Economics Weekly - High unemployment - a symptom of the debt crisis; Weekly economic data preview - US payrolls to post first gain in four months

Economics Weekly 4 October 2010

 

High unemployment - a symptom of the debt crisis

 

 

Unemployment remains high in all of the advanced economies and in some is still rising. Almost a year into the economic recovery, unemployment in the eurozone rose to 10.1% in July 2010. It seems that recovery from the recent recession has not had the expected impact on unemployment levels. Still, it is well known that unemployment lags the economic cycle. So are the trends we are seeing in unemployment that different from previous recessions? We explore that issue in this Weekly.

 

Even a brief glance at the extent of the output gap – the extent to which current output ncompares with the long run potential – suggests that there is still substantial spare capacity in the economies of the advanced countries. History suggests that in this environment, unemployment continues to rise. It is not until actual output rises above potential, that there is a sustained fall in the unemployment rate.

 

Admittedly, employment usually starts to increase before unemployment falls, but not to the extent that it results in a fall in the rate of unemployment. What is the reason for this? The short answer is growth in the labour force. If growth in the labour force - which includes the number of people looking for work - is faster than growth in employment, then the unemployment rate will increase. For instance, when the economy is in recession or slowing sharply, the rate of unemployment rises and people find it hard to get work. A proportion of them tend to leave the labour force, and stop searching for jobs. This then reduces the unemployment rate. In an upswing, however, these ‘discouraged workers’, tend to rejoin the labour force, and, depending on the numbers, this will mean only a slow fall in the unemployment rate. But this does not seem to be what is happening at this time. Rather, with a still large output gap, there simply is not enough economic growth at present to increase job creation sufficiently to lower unemployment rates significantly. Indeed, in the Euro area unemployment is still rising. In the US, unemployment is at least beginning to fall. In the UK - where the rate of unemployment did not rise as much as in the US or the Eurozone - it is still high, despite UK economic recovery starting in Q4 2009, see chart b.

 

We would have to go all the way back to the 1930s to find a period when US economic growth has fallen as much as in this recession. Comparing the two worst recessionary periods since the 1970s suggests that the rise in US unemployment could have been worse based on the drop in gdp. As US economic growth has recovered back into positive territory, the unemployment rate is already beginning to fall. If economic growth continues to recover, it seems likely that US unemployment will fall further. However, the US economic recovery - like that in other advanced economies has been badly affected by the credit crisis and is being held back by the need for companies and households to reduce their debt burden. Hence, the fall in unemployment is likely to be rather slower than in recessions where there has been no financial shock. (See our Weekly dated 16th August 2010).

 

In the case of the UK, unemployment is not falling, even though the annual rate of GDP growth has turned positive. An even worse profile is evident in the Eurozone where even though the economy has recovered, unemployment is still rising. It is not hard to find reasons for why that is occurring. Obvious contenders are deficit economies suffering debt crises, like Greece, Ireland, Portugal and Spain, which have seen unemployment jump well into double digits in the past year. Worse, there are signs that the crisis in these economies could persist for some time and could even deepen.

 

Is this economic crisis really having a worse impact on unemployment rates than previous downturns? One way of answering this is to compare the evolution of unemployment in previous recessions to the latest one. This is shown in charts c and d for the UK and US. This analysis shows that US unemployment is not quite as high as it was in the 1980s downturn, but it is much worse than in the 1980s or the 1970s recessions. It could be that the US unemployment rate does fall as quickly as in the 1980s downturn and to similar lows in the same sort of time frame. However, as the chart shows, it is too soon to make this judgement.

 

Given the lags that unemployment has with the real economy, we will not be able to say that unemployment has performed better or worse in the case of the US for about another 3 years. It took the US economy over 24 quarters, or 6 years,  before unemployment fell to the level that prevailed before the onset of recession. In short, there is another 3 ½ years to go before any assessment of the unemployment performance of the US economy in this recession could be said to be worse than in any recession since the 1970s. For the UK, the evidence already shows that unemployment has peaked at a lower level than in the 1980s and the 1990s recessions, see chart d. It is worse than the 1970s, but then it continued to rise for much longer. In short, the evidence for the UK suggests that unemployment has performed better than could have been expected, especially given the debt crisis. It may be too soon to be sure, but so far cuts in take home pay seem to have alleviated the effects of the recession on UK unemployment.

 

Overall, this evidence has to be seen as good news for the US and UK. Despite the worst economic and financial crisis since the 1930s, the behaviour of labour markets in the US and the UK has not been anything as bad as then. This is evidence that having flexible labour markets can and does mitigate the effects of economic crisis on unemployment. Whether this is true for the eurozone remains to be seen.

 

Trevor Williams, Chief Economist,

Corporate Markets

 

 

Weekly economic data preview 4 October 2010

 

US payrolls to post first gain in four months

 

This week sees a number of key UK data releases with the Bank of England interest rate announcement, the publication of the services PMI index and industrial output figures for August. The policy decision itself is expected to be straightforward, with both Bank Rate and the size of the QE program left unchanged. However, the debate surrounding the appropriate level of policy is certainly heating up. Data over the past month have painted a more downbeat picture of the UK economy, with the prospects for the services sector being of particular concern given the falls in the monthly index in both June and July. Of course, in the Inflation Report back in August, the Bank had forecast growth to slow in coming quarters, so the question really is whether it has done so by more than the Committee had been expecting. It is almost certain that Andrew Sentance will argue that the answer is ‘no’ and that the volatility in the monthly data is entirely consistent with the normal fluctuations in the growth cycle. As such he is likely to vote for a rate hike for a fifth month in a row. But on the opposing side of the debate, Andrew Posen made it clear in a recent speech that he thinks the recovery is flagging and requires further support. We suspect that it will take some time for the remaining members to make up their mind, but our own view is more closely aligned with Posen’s interpretation of recent events and we look for this week’s data to strengthen his side of the argument. In particular, we expect the closely-watched services PMI to show that growth in the sector is close to stalling, with the employment component being particularly weak. Official manufacturing output figures for August, on the other hand, are forecast to show a small rise, although the outlook has been clouded by a further drop in the manufacturing PMI.

 

We forecast US non-farm payrolls increased by 20,000 in September, marking the first gain in four months. The retiring of temporary workers related to census 2010 will again have a major bearing on the outcome, although the headcount was down to just 82,000 in August from a peak of 564,000 in May. We look for overall government employment to fall by 55,000, while private sector payrolls are forecast to increase by 75,000, up from 67,000 last month. The September employment report will include the latest benchmark revisions to reflect new seasonal adjustments and birth/death adjustments, leading to potentially significant changes to past data. The Household Survey data are expected to show a slight rise in the unemployment rate to 9.7%, reflecting a modest rise in labour force participation. The average workweek is predicted to remain steady at 34.2 for the third successive month, while hourly earnings post a 0.2% gain. A key function of data ahead of Friday’s employment report will be to help refine estimates and highlight potential risks for this release. The non-manufacturing ISM will therefore be watched on Tuesday as closely for the headline number as for the employment sub index. We look for modest improvement in both. The ADP employment report, on Wednesday, is forecast to show a 25,000 gain in private sector jobs. Fed speakers this week include Bernanke and Hoenig.

 

The highlight in the eurozone this week is the ECB interest rate meeting on Thursday. We expect no change to policy but the press conference should provide several points of interest and debate. Meanwhile, in Australia, the interest rate debate has heated up once again. While there are arguments both for and against a rate rise, we believe the former will prevail and look for the RBA to raise rates by 25 basis points at its meeting on Tuesday on the back of the strong labour market conditions. In contrast, the Bank of Japan looks set to debate additional stimulus measures at its monetary policy meeting on Monday.

 

Economic Research team

 

Lloyds TSB Corporate Markets Economic Research, 10 Gresham Street, London, EC2V 7AE, Switchboard: 0207 626 1500. www.lloydstsbcorporatemarkets.com Bloomberg: LLOY<GO>

 

IMPORTANT NOTICE

This document, its contents and any related communication (altogether, the "Communication") does not constitute or form part of any offer to sell or an invitation to subscribe for, hold or purchase any securities or any other investment. This Communication shall not form the basis of or be relied on in connection with any contract or commitment whatsoever. This Communication is not intended to form, and should not form, the basis of any investment decision.

This Communication is not and should not be treated as investment research, a research recommendation, an opinion or advice. Recipients should conduct their own independent enquiries and obtain their own professional legal, regulatory, tax or accounting advice as appropriate. Any transaction which a recipient of this Communication may subsequently enter into may only be on the basis of such enquiries and advice, and that recipient's own knowledge and experience. This Communication has been prepared by, and is subject to the copyright of, Lloyds TSB Bank plc ("Lloyds TSB"). This Communication may not, in whole or in part, be reproduced, transmitted, stored in a retrieval system or translated in any other language in any form, by any means without the prior written consent of Lloyds. This Communication is provided for information purposes only, and is confidential and may not be referred to, disclosed, reproduced or redistributed, in whole or in part, to any other person. This Communication is based on current public information.

Whilst Lloyds TSB has exercised reasonable care in preparing this Communication, no representation or warranty, express or implied, is made as to the accuracy, reliability or completeness of the facts and date contained herein by Lloyds TSB, its group companies and its or their directors, officers, employees, associates and agents (altogether, "Lloyds TSB Persons"). The information contained in this Communication has not been independently verified by Lloyds TSB. The information and any opinions in this Communication are subject to change at any time and Lloyds is under no obligation to inform any person of any such change. This Communication may refer to future events which may or may not be within the control of Lloyds TSB Persons, and no representation or warranty, express or implied, is made as to whether or not such an event will occur. To the fullest extent permitted by applicable law, regulation and rule of regulatory body, Lloyds TSB Persons accept no responsibility for and shall have no liability for any loss in relation to this Communication, however arising (including in relation to any projections, analyses, assumptions and/ or opinions contained herein nor for any loss of profit or damages or any liability to a third party).  

Lloyds TSB Corporate Markets is a trading name of Lloyds TSB Bank plc and Lloyds TSB Scotland plc. Lloyds TSB Bank plc's registered office is at 25 Gresham Street, London EC2V 7HN and it is registered in England and Wales under no. 2065. Lloyds TSB Scotland plc's registered office is at Henry Duncan House, 120 George Street, Edinburgh EH2 4LH. Lloyds TSB Bank plc and Lloyds TSB Scotland plc are authorised and regulated by the Financial Services Authority.

 

 

 

 

Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."



Elevate Your Trading With The Amazing Trader!

The Amazing Trader includes:
  • Actionable trading levels delivered to YOUR charts in real-time.
  • Live trading strategy sessions.
  • Market Updates with Trading Tools.

Register To Test Your Amazing Trader


Trading Ideas for 18 December 2017

Register for the Amazing Trader

1.

Amazing Trader EVENT RISK Calendar:

Mon 18 Dec
10:00 EZ- final HICP
Tue 19 Dec
09:00 DE- IFO Survey
13:30 US- Housing Starts/Permits
13:30 US- Current Account
Wed 20 Dec
15:00 US- Existing Homes Sales
15:30 US- EIA Crude
Thu 21 Dec
03:00 JP- BOJ Decision
13:30 CA- CPI & Retail Sales
13:30 US Weely Jobless
13:30 US- GDP
Fri 22 Dec
09:30 US- GB- GDP
13:30 US- core PCE Deflator & Presonal Income
15:00 US- New Homes Sales
15:00 US- final University of Michigan
17:00 US- early Closes
Mon 25 Dec
00:00 Christmas Holidays

Forex Trading Outlook


Potential Trading Opportunities

  • POTENTIAL PRICE RISK: Medium Mon--10:00 GMT-- EZ- final November HICP. flash data are rarely changed.


  • POTENTIAL PRICE RISK: HIGH- Medium Tue --09:00 GMT-- DE- IFO Survey. Key report but usually not a market-mover
  • POTENTIAL PRICE RISK: HIGH- Medium- Tue --13:30 GMT-- US- Housing Starts and Permits. Leading indicators of activity

  • POTENTIAL PRICE RISK: HIGH-Medium- Wed --15:00-- US- Existing Homes Sales. Top Housing statistic
  • POTENTIAL PRICE RISK: Medium- Wed --15:30-- US- EIA Crude

John M. Bland, MBA
co-founding Partner, Global-View.com EXCLUSIVE: Global-View Daily Trading Chart Points Updated

EXCLUSIVE: Global-View Free Forex Database updated




TRADER ADVOCACY ARTICLES

Trader's Advocate Articles..

pic

Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

 
Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map


Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog

Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.

 

WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105