EUROPE: Unemployment is Still High by Angelo Airaghi [Guest Analyst] 7/5/2010

The U.S. government is struggling to have the job bills approved by the Senate. For some, it would refrain unemployed to aggressively look for work. The British pound is at key levels against the U.S. dollar. A break out would take the price to new highs.

Household spending rose 0.2% month on month in May, from unchanged in April, as durable goods purchases rose 0.8%, while non-durable goods declined 0.9%. Inflation stays at the contrary mild. The core PCE deflator moved up 0.2% or 1.3% yearly. Personal income climbed only 0.4%, since salaries of the private sector moved up 0.4%.The U.S. government is still struggling to have the job bills approved by the Senate, otherwise more than 1 million Americans could finish the unemployment benefits by the end of June. There are nonetheless many who are against a new bill because it would refrain unemployed to aggressively look for work and relay instead on the monthly check. In reality, the savings rate is now back to 4.0%, the highest level since September, but the increase would possibly restrain growth in the months ahead. In fact, global growth has apparently lost momentum. The measures implemented in Europe and Japan to reduce the deficit will slow the economic activity, while banks might start to be effected by tighter financial regulation. In effect, factory orders fell 1.4% in May following gains of 1.0% and 1.7% in April and March. Non-defence aircraft and parts slumped almost 30%. It moved up 218% in April. However, investment in equipment and software rose 12% in the second quarter of 2010, from the + 19% in the last quarter of 2009. In June, payroll employment fell by 125,000 after having increased 433,000 in May. The unemployment rate declined instead to 9.5% from 9.7% the previous month, due to improvement in the service sector. The Federal Reserve is expected to keep rates low for most of 2010 with uncertainty still high and inflation low.


Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.

This article contains the following sections:

U.S.: Savings rising

EUROPE: unemployment still high

GBP/USD: at key resistance line

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