The nation's unemployment rate has climbed to a four-year high of 5.7 percent in July, as employers cut 51,000 jobs. That brings the total number of job losses this year to 463,000, according to the government. The rise in the jobless rate came as many young people looked for summer jobs. The unemployment rate for teenagers surged to more than 20 percent--the highest since late 1992. Job losses were largest in areas hit by the housing, credit and financial slumps. Manufacturers cut 35,000 positions, construction companies got rid of 22,000 and retailers shed 17,000 jobs. Temporary help firms eliminated 29,000 jobs. Gains were seen in government, education and health care. The latest snapshot, released by the Labor Department, shows that employers remain cautious as a lack of credit stunts their expansion plans and willingness to hire.
The number of initial jobless claims in Texas declined last week, according to the Texas Workforce Commission, but are still 20 per cent higher than this time last year. First-week claims for unemployment insurance statewide fell to just above 13,000 last week, down from just over 16,000 the previous week. Continued jobless claims fell to just over 117,000 last week—a 3.5 per cent decline from the previous week.
Houston has fared better than the rest of the nation, and that's been credited to the city's diversification. But Corestaff Services CEO Steve Drexel says there's a misconception that when businesses lay off full time workers, they hire temporary workers.
"Our business is really quite cyclical. In fact, when times are bad, you know, we contract twice as fast as the economy. But then, when things pick up we benefit. We'll grow three times as fast as the economy. So, temporary help world is off further than the general economy. Although as you suggested, we're not hurting so much in Houston. It's more places like New York or Los Angeles that are hurting." Ed: "You're really in a better position to have a better crystal ball than a lot of us. What do you see for the rest of 2008 and into next year? "We're disappointed because while this has not been a severe kind of a recession, it's been kind of a prolonged downturn So we're about 17 months into declining employment—off about eight per cent. Typical recession we'd be off maybe 20 percent. But it's unusual that it's been 17 months of decline. We're going into the second half of the year without much momentum. So we think it's probably going to be second quarter of '09 before there's any kind of a pickup."
Houston-based Corestaff employs more than 36,000 temporary workers and operates over 100 offices nationwide.
The government says construction spending in June posted the 11th decline in the past 13 months. The Commerce Department says spending dropped 0.4 percent in June, in line with expectations. Home building posted the 15th straight drop. Builders have continued to cut back on their activity to cope with the severe housing slump and credit crisis. Weakness in housing activity offset strength in other building activity. There was a big increase in building activity for hotels and motels and a number of other commercial building projects.
A private research group's survey shows that U.S. manufacturing activity was flat in July, as higher prices weighed on growth. The reading of 50 from the Institute for Supply Management slid slightly from 50.2 in June. It still beats economists' prediction of a reading of 49.2, however. A reading above 50 signals growth. The index of prices manufacturers pay for raw materials grew, but at a slower rate than June, when it hit its highest level since 1979. Exports continue to fuel the index, however. The rate of growth for exports slowed, but it was the 68th straight month that exports grew, thanks to the weak dollar.
A divided Federal Communications Commission has ruled Comcast violated federal policy when it blocked Internet traffic for some subscribers and has ordered the cable giant to change the way it manages its network. In a precedent-setting move, the FCC by a 3-2 vote on Friday enforced a policy that guarantees customers open access to the Internet. The commission did not assess a fine, but ordered the company to stop cutting off transfers of large data files among customers who use a special type of "file-sharing" software. Republican FCC Chairman Kevin Martin criticized the company for failing to tell customers exactly how it was managing its traffic. He says Comcast managers had arbitrarily picked an application and blocked their subscribers' access to it. Comcast says it is disappointed in the divided conclusion and believes its network management choices were reasonable. It says it didn't block traffic, it only delayed it. Comcast says the FCC's so-called network-neutrality "principles" are part of a policy statement and are not enforceable rules.
General Motors says its losses widened to $15.5 billion in the second quarter as North American sales plummeted and the company faced expenses due to labor unrest and its massive restructuring plan. It's the third-largest quarterly loss in company history. The company says the loss includes $9.1 billion in one-time charges, including $3.3 billion for the buyouts of 19,000 U.S. hourly workers. More buyouts may be coming. GM's chief financial officer says the automaker might offer its U.S. hourly workers another round of buyout and early retirement offers. Ray Young says a steep decline in demand for GM trucks and SUVs has forced the closure of several North American plants and could lead to additional buyouts. Last month the automaker said it was planning to cut production by 300,000 vehicles. GM's hourly work force has been cut by more than half in recent years as the company's U.S. market share shrinks. Two years ago, gm had a total of 113,000 hourly workers in the U.S. it now has less than half that.
Ford says its July U.S. sales tumbled, as high gas prices steered consumers away from sport utility vehicles and pickup trucks. Dearborn, Michigan-based Ford sold a total of 161,071 vehicles in July, down 14.8 percent from 188,988 in the same month last year. Company officials said they expect things to get tougher in the second half of 2008 as a result of weakening economic and credit conditions. So far this year, Ford sales are down 14.2 percent to 1.3 million vehicles from 1.5 million at the same time last year.
Toyota, says its sales fell 12 percent last month, led by a 27 per cent drop in truck and SUV sales. Sales of its Prius hybrid fell 15 percent as Toyota failed to keep up with demand.
Engineering and construction services provider KBR reports lower second-quarter profits. Houston-based KBR, which split from Halliburton in 2007, said net income for the quarter that ended June 30th slipped to $48 million. That compares to a year-ago profit of $140 million. The 2007 period included $90 million worth of earnings related to its former stake in Devonport Management. Revenue grew 24 percent. A Texas jury on July 23rd awarded a KBR subcontractor damages of $39 million, plus legal fees and interest. Associated Construction was a KBR subcontractor in Iraq in 2003 on a U.S. Army contract. KBR plans to appeal.
Lifted by record crude prices, Chevron says its second-quarter profit rose 11 percent from a year ago, capping another round of massive earnings for the major oil companies. But the results missed Wall Street forecasts. The San Ramon, California-based company said Friday that it made $5.98 billion during the three months ended June 30th, versus income of $5.38 billion a year earlier. Revenue rose significantly to $82.9 billion from $56.1 billion a year ago. Analysts surveyed by Thomson Financial expected revenue of $92.41 billion.
This week has seen a string of gargantuan, record-breaking earnings reports—a stretch in which six of the major international oil companies topped $50 billion in combined profit. While the profits of unparalleled size have brought withering criticism from Washington and disgust from consumers across the country, very few were surprised. Crude prices during the second quarter were nearly double what they were a year ago. Soaring commodity prices led to record quarters for ExxonMobil, Houston-based ConocoPhillips, BP, Total and Royal Dutch Shell. Irving-based ExxonMobil stood apart even from this crowd, logging the largest ever quarterly operating profit for a U.S. company.
The number of rigs actively exploring for oil and natural gas in the United States dropped by six this week to 1,951. Of the rigs running nationwide, 1,550 were exploring for natural gas and 392 for oil, according to Houston-based Baker Hughes. Nine were listed as miscellaneous. A year ago, the rig count stood at 1,781. Texas lost six rigs. Baker Hughes has tracked rig counts since 1944. The tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted several record lows in 1999, bottoming out at 488.