WASHINGTON (AFP) — US job losses accelerated in November while German car sales skidded to new lows, according to the latest batch of data Wednesday that added to worries about the global economic outlook.
Yet stock markets showed resilience despite the barrage of grim news, as investors appeared to look past the turmoil and focused on one bit of positive news suggesting a possible rebound in the troubled US housing sector.
In the United States, surveys showed the labor market shed jobs at a breakneck pace in November, a troublesome sign for an economy mired in recession.
In an ominous sign for the holiday shopping season, the private sector lost 250,000 jobs last month, the largest decline in six years, according to the ADP National Employment Report.
In another report, labor consultancy Challenger, Gray & Christmas said layoffs announced by employers in November rose to 181,671 as job cuts for the year officially surpassed one million for the first time since 2005.
"The layoff announcements data corroborate other employment-related indicators in suggesting that labor market conditions have deteriorated significantly in the fourth quarter," said John Ryding of RDQ Economics.
A separate service sector survey then showed a brutal fall to 37.3 points from 44.4 points in the October Institute of Supply Management index, much worse than analyst forecasts for 42 points.
"The steep drop in services industry activity in November is another sobering reminder of the potentially devastating consequences of the current long and painful recession," said Brian Bethune, economist at IHS Global Insight.
But markets latched onto one positive bit of news, a survey showing a surprisingly strong demand for home loans from the US Mortgage Bankers Association.
The report showed an increase of 112.1 percent on a seasonally adjusted basis from one week earlier.
"Many borrowers missed an opportunity to take advantage when rates dropped sharply for a brief period" earlier this year, said MBA vice president Orawin Velz, who cited a rush to take advantage of lower rates.
The group said the average interest rate for 30-year, fixed-rate mortgages decreased to 5.47 percent from 5.99 percent.
The report showing rising mortgage demand was "a huge surprise," which could help the sector at the center of the economic storm, said Gregory Drahuschak, analyst at Janney Montgomery Scott.
Earlier the 15-nation eurozone service sector activity index, compiled by data and research group Markit, fell to 42.5 points in November from 45.8 points in October, worse than a first estimate of 43.3 points.
The problems facing the auto industry were highlighted by German figures showing new car sales slumped 18 percent in November and appeared headed to their worst performance since national reunification in 1990.
The VDA auto manufacturers federation said sales this year would be just under 3.1 million vehicles, falling further to 2.9 million in 2009.
The US auto industry is likewise under severe threat, having just reported calamitous domestic sales declines in November and as its leaders plead with the US government for a bailout worth some 34 billion dollars.
French President Nicholas Sarkozy was due to unveil on Thursday a 20-billion-euro (25-billion-dollar) stimulus package targeting the vital car industry as well as housing and household spending.
There were hopes too that the European Central Bank and Bank of England would both cut interest rates sharply on Thursday to give relief to borrowers and keep consumer spending on track.
Other eurozone data showed retail sales in October down 0.8 percent from September and falling 2.1 percent from a year earlier, much worse than expected and stoking concerns about the outlook.
Stock markets held firm in the face of the glum news. In London, the FTSE 100 index of leading shares closed up 1.14 percent at 4,169.96. The Paris CAC 40 gained 0.44 percent to 3,166.65 and in Frankfurt the DAX rose 0.78 percent to 4,567.24 .
On Wall Street, the Dow Jones industrials held a gain of 0.59 percent ahead of the close.
Queen Elizabeth II unveiled the British government's legislative program for the next year Wednesday, stressing its "overriding priority" was to bolster the economy against looming recession.
The lavish ceremony surrounding the Queen's Speech -- when she speaks from a gold throne in the House of Lords, wearing an ermine robe and a crown studded with nearly 3,000 diamonds -- contrasted with her message of economic caution.
China meanwhile it will continue to relax credit controls and use all monetary means to stimulate the economy
"We need to apply a flexible and proper monetary policy to combat the crisis and maintain fast and stable growth," said a statement issued at the end of a meeting chaired by Prime Minister Wen Jiabao.
The government also said it wanted "to accelerate credit growth, using the bank reserve rate, interest rates and exchange rates" to increase state spending.
Copyright © 2009 AFP. All rights reserved. More »
