US JOBLESSNESS surged to a 26-year high of 9.7 per cent in August, but the pace of job losses slowed to the lowest level in a year, fuelling hope that the worst of the recession is over.
Closely watched official data showed employers cut 216,000 jobs last month, the 20th month of losses in a row. But the non-farm payroll figures were stronger than economists expected.
An influx of workers to the labour market lifted the unemployment rate above July’s rate of 9.4 per cent and the 9.5 per cent predicted by analysts.
According to Reuters, the International Monetary Fund is to raise its growth forecast for the world economy for 2010 to 2.9 per cent, up from its forecast of 2.5 per cent last April.
The IMF now forecasts the world economy to shrink by 1.3 per cent in 2009, a shade less than its April forecast of a 1.4 per cent contraction.
Dominique Strauss Kahn, IMF executive director, warned that, while there were signs that the overall picture was improving, it would be a mistake for governments to begin unwinding extraordinary stimulus packages immediately.
His remarks came as finance ministers from the Group of 20 most industrialised nations gathered in London for talks today on a better regulatory framework for the financial system, with bankers’ bonuses still a subject of contention.
France and Germany favour a cap on bonuses or a targeted tax on excess remuneration – proposals the US and UK believe would be difficult to implement.
Alistair Darling, UK chancellor of the Exchequer, said Britain was prepared to discuss the issue.
“The French have come up with caps on bonuses. I personally don’t think that’s a practical proposition when there are other proposals around,” he said. “For this to work you’ve got to get global agreement.”
According to officials familiar with preparations for the meeting, reform of the financial system will be a trickier issue.
US treasury secretary Tim Geithner set out key elements that should shape any new structure, including a requirement that banks have bigger, and more secure, cushions of capital to shield them in a downturn. – (Copyright The Financial Times Limited 2009)
