U.S unemployment rate dropped to 5.1 percent for the first time in 7 years. The last time similar data was recorded was in April 2008 when unemployment rate was 5 percent prior to global economic crisis that pushed unemployment as high as 10 percent in the 4Q of 2009. At this point it can be said that the US has attained full employment based on Federal Reserve definition of full employment in the economy.
The positive report was as a result of employers upbeat about America’s demand prospects as indicated by the decrease of $3.3 billion in trade balance deficit released on Thursday by the Bureau of Economic Analysis. The better than expected report shows a reasonable surge in exports and increase in manufacturing for the month of August. Although, ADP Non-Farm Employment change increased by 13,000 from 177,000 recorded in July to 190,000 in August yet it fell short of economists’ expectation of 204,000.
A senior economist at Moody’s Analytics Inc. was quoted saying “All in all this a very good report, based on the data it doesn’t seem that global financial and international markets is significantly affecting the U.S economy”
|Key Economic Data of the Week|
|ISM Manufacturing PMI declined from 52.7 in July to 51.1 in August|
|ISM Non-manufacturing PMI dropped to 59.0 from previous 60.3, better than expected 58.3|
|ADP Non-Farm Employment Change increased from 177,000 to 190,000 in August, worse than expected (240,000)|
|Trade Balance, deficit sank from 45.2 B to 41.9B, better than expected 43.2B|
|Unemployment Claims jumped from 270,000 to 282,000 in August, falling below expected 273,000|
Change in the total number of employed workers during August (excluding those in the farming industry) increased by 173,000, the lowest since August 2014. According to the report from Bureau of Labor Statistics, manufacturing and mining lost jobs but job gains occurred in health care and social assistance and also in financial activities.
Non-manufacturing sector has been the driving force of the economy for months, and contributed the most to the 5.1 percent reduction in unemployment rate.
The report clearly shows that manufacturing sector is still struggling and yet to fully picked up, the data released by Institute for Supply Management (ISM) indicates economic expansion but when compared to what was obtained in July (52.1) and expected result of 52.6, it is low and almost at 50.0 expansion’s bottom level of the ISM indicator.
The positive data from unemployment rate has been overshadowed by the poor data from manufacturing leading to poor non-farm payrolls data. The better than expected trade balance was as a result of the increase in business activities of the service sector, which is further validated by the surge in unemployment claims to 182,000 according to the data released by Department of Labor. If the jobs created were substantial why the increase in unemployment claims?
Overall the data is mixed, stronger dollar is still hindering exports and continuous fall in global prices is slowing down activities in mining industry, for now it seem the service industry is the powerhouse of the economy but for how long? However, the probability of Fed increasing interest rate might just as well have been increased, it’s needed to curb inflation and soften dollar strength.
Our view on USDJPY still stand.
Nigeria’s Real Estate Sector Shrinks by 8.06% in the Third Quarter -NBS
Economic uncertainty plunged Nigeria’s real estate sector by 8.06 percent in the third quarter of the year, according to the National Bureau of Statistics (NBS).
Nigeria’s statistics office said “In nominal terms, real estate services recorded a growth rate of –8.06 per cent in the third quarter of 2020, indicating a decline of –11.78 per cent points compared to the growth rate at the same period in 2019, and by 9.12 per cent points when compared to the preceding quarter.
“Quarter-on-quarter, the sector growth rate was 18.92 per cent.
“Real GDP growth recorded in the sector in Q3 2020 stood at -13.40 per cent, lower than the growth recorded in third quarter of 2019 by –11.09 per cent points, but higher relative to Q2 2020 by 8.59 per cent points.
“Quarter-on-quarter, the sector grew by 17.15 per cent in the third quarter of 2020.
“It contributed 5.58 per cent to real GDP in Q3, 2020, lower than the 6.21 per cent it recorded in the corresponding quarter of 2019.”
Nigeria’s economy contracted by 2.48 percent in the first nine months following a 6.10 percent and 3.62 percent contraction in the second and third quarters respectively.
Nigeria Requires N400 Billion Annually to Maintain Federal Roads -Senator Bassey
The Chairman of the Senate Committee on road maintenance, Senator Gersome Bassey, on Friday said Nigeria requires about N400 billion annually to maintain federal roads across the country.
The Senator, therefore, described the N38 billion budgeted for road repairs in the 2021 proposed Budget as grossly inadequate. According to him, nothing meaningful could be achieved by the Federal Roads Maintenance Agency (FERMA) with such an amount.
He said, “For the 35 kilometres federal roads in the country to be motorable at all times, the sum of N400bn is required on yearly basis for maintenance.”
Bassey “What the committee submitted to the Appropriation Committee in the 2021 fiscal year is the N38bn proposed for it by the executive which cannot cover up to one quarter of the entire length of deplorable roads in the country.
“Unfortunately, despite having the power of appropriation, we cannot as a committee jerk up the sum since we are not in a position to carry out the estimation of work to be done on each of the specific portion of the road.
“Doing that without proposals to that effect from the executive, may lead to project insertion or padding as often alleged in the media.”
Scarcity of Day-Old-Chicks Cripple Poultry Farmers in Akwa Ibom
Despite billions of Naira spent on Akwa Prime Hatchery and Poultry Limited by the Executive Governor of Akwa Ibom State, Udom Emmanuel, poultry farmers in the state said they had to order day-old-chicks from outside the state as the 200,000 capacity poultry farm developed specifically to make day-old-chicks and other poultry products available at affordable prices is almost empty at the moment.
The farmers expressed frustration over many challenges they face in the course of bringing day-old-chicks from outside the state. Usually, Ibadan, Enugu and sometimes as far as Kaduna, while the hatchery built and inaugurated in 2016 remains idle.
Mr Ekot Akpan, one of the poultry farmers who spoke with the pressmen said the state had not had it this bad.
Akpan said: “For the 12 years that I have been in poultry farming, this is the first time that poultry farmers have been so harshly affected by both economic and non-economic factors. And, quite unfortunately, nobody is available to offer any explanation.
“Farmers have been left at the whims and caprice of owners of the means of production.
“There seems to be no government regulation of the poultry industry. How, do you explain a situation where you wake up suddenly and the price of a day old chick is selling for N600, a bag of feed goes as high as N6,000.
“And, in a state that government claims to be pursuing agriculture as one of his cardinal programmes.
“For instance, in 2016, the state government said it has constructed an hatchery, and the intention according the government was to ensure availability of day old chicks at affordable price to farmers, but, quite, unfortunately, that effort has not yielded any tangible result.
“Farmers are still getting their day old chicks from Ibadan, Kaduna, and Enugu. So, the question now is where is the hatchery?
“One would have expected that farmers would be buying old chicks at humane prices, but, from all indications they acclaimed hatchery is a ruse. So, which one is the Akwa Prime Hatchery producing,” he said.
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