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Friday, November 6, 2009

US Shares Have Risen Strongly

Collection : BBC News

US shares have risen strongly after official figures showed that US business productivity has risen at its highest rate for six years.Productivity, as measured by output per hour of work, rose at an annual rate of 9.5% between July and September.

The data suggests that firms, which have cut jobs in the downturn, are now increasing their output, which may in turn lead to them needing more staff. Wall Street's main Dow Jones index ended up 2% following the news.

Increased payrolls

"We believe businesses will have to start to increase hours worked and payrolls around the turn of the year since they cannot expect their current work force to sustain such rapid productivity growth," said Michelle Meyer, an economist at Barclays Capital.senior economist at RBS in Connecticut agreed, saying: "Companies will be forced to add workers earlier in this recovery than was the case following the last two recessions."

If firms do start to take on more staff quicker than had been expected, it would be good news for an economy where the labour market is trailing behind the wider recovery. For while the US economy grew 3.5% in July to September - its first expansion since June 2008 - the official jobless rate rose to 9.8% in September, a 26-year high.

The Federal Reserve, the US central bank, left interest rates on hold at between 0% and 0.25% on Thursday, where they have remained since December of last year. It reiterated its view that rates would need to stay at the historic low for an "extended period" to help the continuing economic recovery.



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