U.S. Payroll Growth Is Slowest in 8 Months

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
August 6, 2004 9:25 a.m.

WASHINGTON -- U.S. employers hired workers at the slowest pace in eight months in July, fanning fears about the economic recovery and raising doubts about whether the Federal Reserve will raise interest rates next week.

Nonfarm business payrolls grew by a net 32,000 jobs last month, the smallest increase since December, the Labor Department said Friday. The government also said employers created 61,000 fewer more jobs in May and June than was first estimated.

Still, the U.S. unemployment rate dropped a tenth of a percentage point to 5.5%, the lowest level since October 2001. The payrolls figure and the unemployment rate can sometimes indicate opposing trends because they are derived from two separate statistical surveys.

Economists had expected payroll growth of 215,000 jobs and the unemployment rate to hold at 5.6%, according to a survey by Dow Jones Newswires and CNBC.

"This soft July report poses a real problem for the market," said Daragh Maher, economist at ING Financial Markets. "Assertions, our own included, that June's disappointment was an aberration are clearly more difficult to defend in light of July's massive shortfall."

Revisions to the previous two months showed that employers added only 208,000 jobs in May and 78,000 in June. Previous estimates had shown increases of 235,000 and 112,000, respectively.

Oil Prices Set Record Before Slight Retreat

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
August 6, 2004 9:51 a.m.

LONDON -- Crude-oil futures briefly soared to new heights as jumpy markets dismissed reassurances from OPEC that it is prepared to raise oil output by more than a million barrels a day.

U.S. light crude for September delivery traded as high as $44.77 before a selloff pushed it back down, and by the close of electronic trading this morning the contract was down 16 cents to $44.25. The contract had finished at $44.41 a barrel yesterday in New York -- an all-time closing high in the 21-year history of such trading on the exchange.

Uncertainty over crude supplies from the Middle East, disruptions in Iraqi oil exports and fears of terrorism have combined to help drive prices higher. Crude is now almost 40% more expensive than it was a year ago.

A fire at a Texas refinery and Russia's decision to revoke permission for beleaguered oil company Yukos to use previously frozen bank accounts to keep itself afloat (see related article have added to anxiety in energy markets.

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"There is a lot of speculation. Hedge funds are still buying, expecting prices to go even higher," said Victor Shum, an analyst with Texas-based energy consultants Pervin & Gertz in Singapore.