NEWS,03.05.2013

US job market shows strength in April

US employment rose more than expected in April and hiring was much stronger than previously thought in the prior two months, easing concerns that belt-tightening in Washington was dealing a big blow to the economy.
Nonfarm payrolls rose 165 000 last month and the jobless rate fell to 7.5%, the lowest level since December 2008, the Labour Department said on Friday.
Payrolls rose by 138 000 jobs in March, 50 000 more than previously reported, and job growth for February was revised up by 64 000 to 332 000, the largest gain since May 2010.
"Overall, a strong set of numbers which will reassure markets that the U.S. economy is not as weak as it may have seemed given some of the earlier data," said Andrew Grantham, an economist at CIBC World Markets in Toronto.
Economists polled by Reuters had expected April payrolls to rise 145 000 and the unemployment rate to hold steady at 7.6%.
US stocks rallied on the data, while government bonds fell hard. The dollar strengthened against the yen and pared losses against the euro.
The drop in the jobless rate reflected a gain in employment, rather than people leaving the workforce. The workforce actually expanded, while the labor force participation rate - the share of working-age Americans who either have a job or are looking for one - held steady at a 34-year low of 63.3%.
Still, some details of the report remained consistent with a slowdown in economic activity. Construction employment fell for the first time since May, while manufacturing payrolls were flat.
The average workweek pulled off a nine-month high, with a gauge of the overall work effort falling, but average hourly earnings rose four cents.
The relative strength of the data was particularly surprising given other recent signs that suggested the economy had slowed sharply in recent weeks. Although the economy expanded at a 2.5% annual pace in the first quarter, a wide range of data suggested it ended the period with less speed. Further, factory activity barely grew in April.
Fiscal headwinds
Economists feared uncertainty over the full impact of higher taxes and deep government spending cuts on already sluggish demand was making businesses reluctant to hire. A 2% payroll tax cut ended at the start of the year, and $85bn in federal budget cuts went into effect on March 1.
"The idea that the employment is holding as well as it is in the face of the fiscal headwinds the economy is currently enduring is a very positive sign of the economy's underlying fundamental improvements," said Russell Price, senior economist at Ameriprise Financial Services in Troy, Michigan.
While the pace of hiring was stronger than expected in April, it remained below the pace needed to put a significant dent in the jobless rate.
Economists said the data did not appear strong enough to dissuade officials at the Federal Reserve from pressing forward with their bond-buying stimulus, although it could cool speculation the US central bank would step up its purchases.
On Wednesday, the Fed said it would continue to buy $85bn in bonds each month and that it would increase purchases should the need arise.
"I don't think today's data is strong enough to completely offset some of the weakness we have seen in some other areas, such as overall manufacturing activity and the general pace of economic growth, so I think the Fed will remain fully engaged," said Price.
All the job gains last month were in the private sector, which added 176 000 new positions. Gains were led by a rebound in retail employment, which had dropped in March after eight straight months of increases. Retail payrolls rose 29 300.
But construction employment surprisingly fell, shedding 6 000 jobs after 10 straight months of gains. Residential construction has been marching higher and the pullback in construction jobs could be the result of cold weather in April.
Manufacturing employment posted no gains last month.
Government payrolls dropped 11 000 after falling 16 000 in March. Most of the job declines last month came from the federal government and the US Postal Service.

Obama reaches out to Mexican young

President Barack Obama and Mexico's new president, Enrique Pena Nieto, are stepping gingerly to avoid any suggestion of meddling in each other's most contentious issues.
Instead, Obama is drawing attention to the cultural ties that have linked the two nations and the economic bonds that have begun to take hold more recently.
Obama was to deliver a speech on Friday to an audience made up primarily of students, highlighting the role they can play in deciding Mexico's future and promoting the type of broad exchanges he envisions under a new immigration regime in the United States.
After his speech, Obama was to meet privately with Mexican businessmen, where he would stress the commercial ties between the two countries. Mexico is the second-largest export market for US goods and services.
Later, he was to travel to Costa Rica, where he planned to deliver a blunter message to Central American leaders struggling with weak economies and drug violence.
Obama was to meet with Costa Rican President Laura Chinchilla, then attend a gathering of leaders from the Central American Integration system. The regional network also includes the leaders of Belize, El Salvador, Guatemala, Honduras, Nicaragua and Panama.
The US view of the region is that its pervasive violence and security weaknesses are holding back economic growth, and that with fewer Mexicans crossing the border illegally, the rest of the region has become the main source of illegal immigration into the United States.
New initiatives
As a result, Obama is expected to call for stepped up security co-operation, regional economic integration, and improvements in human rights and democratic reforms.
Friday's Mexico City speech comes as Obama's popularity in Mexico has risen over recent years and as views of the United States also improve. A Pew Research Centre poll in March found that two-thirds of Mexicans have a favourable opinion of the US, compared with 44% favorability in 2010.
About half of Mexicans have confidence that Obama will do the right thing on world affairs, up from 38% in 2011.
Still, dozens of migrant families deported from the US even though their children were born there rallied outside the US Embassy before Obama's arrival on Thursday. "Obama, don't deport my Mama", one sign said. So far, the Obama administration has deported more than 1.6 million people.
For all the attention to commerce and trade, the visit to Mexico less than two days long  was not designed for major breakthroughs or new initiatives. Indeed, on one of the top economic pacts before them, the two presidents merely reaffirmed a goal to conclude negotiations this year on a Trans-Pacific Partnership, an Asia-Pacific trading bloc that is key to Obama's efforts to boost exports to Asia.
Both men, however, did announce a new partnership to build on the business relationship with closer cooperation between top officials in Mexico and the US, including Vice President Joe Biden.
At a joint news conference on Thursday, Obama and Pena Nieto carefully sidestepped potential trouble spots. Obama steered clear of commenting on Pena Nieto's decision to end the broad access that US security agencies have had in Mexico to combat drug trafficking, a decision that has alarmed some US officials.
Domestic affair
"President Pena Nieto and his team are organizing a vision about how they can most efficiently and effectively address these issues," Obama said. "And we will interact with them in ways that are appropriate, respecting that ultimately Mexico has to deal with its problems internally and we have to deal with ours as well."
For his part, Pena Nieto declined to get drawn into the current immigration debate in Washington, a top priority for Obama but one that is at a delicate stage in Congress. Asked to comment on the debate, the Mexican president merely said that the Mexican government acknowledged the efforts under way in Congress.
"Mexico understands that this is a domestic affair for the US and we wish you the best push that you're giving to immigration," he said.
Likewise, he demurred when asked to react to the failure in the Senate to pass gun control legislation, including an expanded background check for firearms buyers, even though many guns obtained illegally in the United States make their way into the hands of drug dealers in Mexico.
He said he agreed with Obama's campaign to stem gun violence, but added: "This is a domestic issue in the United States."
Obama vowed to keep pressing for gun legislation, saying: "We recognise we've got obligations when it comes to guns that are oftentimes being shipped down South and contributing to violence here in Mexico."

Conservatives suffer in UK local votes

David Cameron's Conservative Party has taken a beating in local elections amid a surge of support for an anti-European Union and anti-immigration party, heaping pressure on the prime minister to shore up support ahead of the next general election.

The early results on Friday show that the right-wing United Kingdom Independence Party, or UKIP, won 42 county council seats, while the opposition Labour Party gained 26. The Liberal Democrats - junior partners in Britain's coalition government - were down 16 county council seats, while Cameron's ruling Conservatives lost 74 seats.

UKIP leader Nigel Farage whose party Cameron once referred to as a bunch of "fruitcakes, loonies and closet racists" said the results will send a "shock wave" through the British political establishment.

"This is a real sea-change in British politics," Farage told the BBC.

The rise of UKIP adds to pressure on Cameron to staunch a flow of voters from his party ahead of the next general election in 2015 and to take a harder line on European reform and immigration.

The results could lend momentum to voices within Cameron's party urging the prime minister to introduce legislation needed to enshrine his pledge for a referendum on European Union membership by 2017.

Michael Fabricant, the Conservative Party's vice-chairperson, confessed he was unsure what voters were saying. "'I hope there will be some serious research about exactly WHAT message UKIP voters are giving: none-of-the-above, or specific issues," he said in a Twitter message.

Voting took place in 34 council contests across England, plus the Isle of Anglesey in Wales.

North Korea Report: Pentagon Says Pyongyang Still Working Toward Goal Of Being Able To Strike U.S. With Nukes

North Korea "will move closer" to its announced goal of being able to strike the U.S. with a nuclear-armed missile if it keeps investing in tests of nuclear and missile technology, the Pentagon said Thursday in a report to Congress.
The unclassified version of the report, which was required by a 2012 law, offered no estimate of when North Korea might achieve that capability. It said the pace of progress will depend in part on how many resources are invested.
The report fits an established U.S. intelligence picture of North Korea making an enormous effort to become a nuclear power and of an economically poor country directing a disproportionate amount of resources to its military.
Much about North Korea is a mystery to Western intelligence agencies, including the intentions of its leader, Kim Jong Un, who came to power after his father, Kim Jong Il, died in December 2011. The Pentagon report said the U.S. foresees little change in North Korea's key strategic aims, which it said to include using "coercive diplomacy" to compel acceptance of its security interests, as well as developing a nuclear arsenal and undermining of the U.S.-South Korean alliance.
"We anticipate these strategic goals will be consistent under North Korea's new leader, Kim Jong Un," it said.
U.S. intelligence agencies are not fully in agreement on how far North Korea has advanced in its effort to make a nuclear weapon small enough to fit atop a ballistic missile. In April, a U.S. congressman disclosed that the Defense Intelligence Agency believes with "moderate confidence" that the North could deliver a nuclear weapon by ballistic missile but with "low reliability." The DIA assessment did not mention the potential range of such a strike.
Director of National Intelligence James Clapper, the top U.S. intelligence official, said shortly after the DIA assessment was made public that its conclusion was not shared by other intelligence agencies. Clapper said North Korea has made progress but has not "fully developed, tested or demonstrated the full range of capabilities necessary for a nuclear-armed missile."
In its report Thursday, the Pentagon made no mention of the DIA report.
The Pentagon asserted that North Korea wants to leverage the perception that it poses a nuclear threat in order to counter technologically superior forces. South Korea, which does not have nuclear weapons, has a modern military that benefits greatly from a close alliance with the U.S. There are about 28,500 American troops based in the South.
The Pentagon report noted that North Korea has recently showcased its advances in missile technology, including an April 2012 parading of a new road-mobile intercontinental ballistic missile that the Pentagon says has not been flight tested.
"These advances in ballistic missile delivery systems, coupled with developments in nuclear technology ... are in line with North Korea's stated objective of being able to strike the U.S. homeland," the report said.
After a February 2013 nuclear test, North Korea made what the Pentagon called "authoritative public announcements" of its desire to field nuclear-armed missiles with sufficient range to attack targets in the United States.
"North Korea will move closer to this goal, as well as increase the threat it poses to U.S. forces and allies in the region, if it continues testing and devoting scarce regime resources to these programs," the report said.
Earlier this year, North Korean leader Kim Jong Un made a series of bellicose threats to attack South Korea, Japan or the United States with nuclear weapons, sparking tough rhetoric in return. In response, the Pentagon in April announced plans to beef up its missile defenses by deploying 14 additional missile interceptors at a military base in Alaska.
Thursday's Pentagon report said the North's work on a space-launch vehicle has contributed heavily to its effort to build a missile capable of reaching the U.S. with a nuclear warhead. That work was highlighted by the launch of a satellite into space last December.
But it added that the North has yet to test a re-entry vehicle, without which it cannot deliver a warhead to a target. A workable re-entry vehicle is necessary to get a warhead back into Earth's atmosphere with protection against severe heating.
The report also projected that North Korea under Kim will stick to its current strategic priorities, including developing nuclear weapons to deter any attack from outside powers and trying to undermine the alliance between the United States and South Korea.