April 20, 2024

Stocks Fall as New Data Shows Slower Job Growth

Private employers added just 38,000 jobs in May, down from 177,000 in April, according to the payroll processor ADP. It was the weakest result since September. The report may offer a preview of Friday’s more comprehensive job report from the Labor Department, which includes hiring by both private employers and the government.

The Standard Poor’s 500-stock index fell 12 points, or 0.9 percent, to 1,334 in morning trading. The Dow Jones industrial average dropped 105 points, or 0.8 percent, to 12,464. The Nasdaq composite index fell 17 points, or 0.6 percent, to 2,818.

Treasury prices rose as investors looked for safer types of investments. The yield on the 10-year Treasury note fell below 3 percent for the first time in 2011.

“As far as we can tell, employers have hugely overreacted to the surge in oil prices, which has slowed but not killed consumption,” said Ian Shepherdson, chief United States economist for High Frequency Economics. The weak ADP results pushed him to cut his forecast for overall job growth in Friday’s report to 75,000. He earlier had forecast growth of 175,000 jobs.

The ADP report has been wrong before as an indicator for the Labor Department’s job report. Last month, it underestimated growth. The private sector added 268,000 jobs in April, according to the government.

Even the manufacturing industry, one of the economy’s bright spots since the recession ended, is slowing. A report from the Institute for Supply Management showed manufacturing expanded in May for the 22nd straight month, but at a slower pace. Manufacturers have benefited since the recession from stronger overseas demand, but China, India and other developing nations are struggling with inflation.

The ISM’s manufacturing index fell to 53.5 from 60.4 in April. A reading of more than 50 indicates the manufacturing industry is growing.

Reports on the nation’s economy have often been discouraging since the spring, raising worries about the strength of the recovery. Weaker-than-expected reports helped knock the S.P. 500 index down 1.4 percent in May. The index had climbed 8.4 percent in 2011 through April on stronger corporate earnings, a recovering global economy and mergers and acquisitions.

Sealed Air, the maker of Bubble Wrap and other packaging, fell 2.3 percent after saying it would buy Diversey Holdings for about $2.9 billion in cash and stock. Diversey provides cleaning products and sanitizers.

Dollar General, the discount store operator, fell 7.1 percent after its first-quarter profit growth fell short of analysts’ expectations.

JoS. A. Bank Clothiers also reported first-quarter profit growth below analysts’ expectations. The men’s clothing maker fell 13.3 percent.

Lions Gate Entertainment rose 4.4 percent after it returned to a profit in its fiscal fourth quarter on lower distribution and marketing costs.

Article source: http://www.nytimes.com/2011/06/02/business/02markets.html?partner=rss&emc=rss

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