U.S. economy weakens across the board, Obama faces major challenges

The U.S. private sector job market deteriorated rapidly in October, while non-manufacturing industries also shrank sharply, as the worst financial crisis in 80 years hit the U.S. economy. The latest ADP private payrolls report showed that U.S. private sector employment fell sharply by 157,000 in October, the largest decline in six years, and business growth The number of planned layoffs also surged to a near five-year high. The Institute for Supply Management (ISM) just released data showing that the U.S. non-manufacturing index also fell to its lowest level since the index began compiling in 1997 in October. HighFrequencyEconomics chief U.S. Analyst Ian Shepherdson said: 'In short, it was scary, but it was to be expected after the stock market rout and the consequent collapse in market confidence.' In currency markets, the dollar fell against the yen but rose against the euro. U.S. Treasury prices were supported by further weakness in equities. The services sector accounts for about 80% of U.S. economic activity The U.S. Institute for Supply Management (ISM) said its non-manufacturing index fell to 44.4 in October from 50.2 in September, lower than the 50 watershed between prosperity and decline, and less than the 47.5 expected by analysts. The ISM report showed The economy is weak across the board, with employment falling to record lows in the sub-indexes and new orders plummeting. **Good News** The only good news in the ISM report is that inflation pressures have also fallen sharply, which should give the U.S. The Federal Reserve has more room to stimulate the economy through interest rate cuts and other moves to support credit markets. It recorded its biggest monthly decline since the index began reporting in 1997. According to the ADP report, U.S. private sector employment fell by 157,000 in October, beating market expectations, indicating a sharp deterioration in the labor market and expected to be in The coming months will get worse. ADP also said it had revised September's decline in employment to 26,000 from an initial estimate of 8,000. ADP said private-sector payrolls fell by the most since November 2002, ADP said. Prakken, president of Macroeconomic Advisers, a co-author of the report, said it was 'entirely possible' that employment would fall by 200,000 a month in the future. No surprise...the magnitude will be about the same as this month, if not widened, and I don't expect an improvement...unless it's possible until the second half of next year.' Challenger, Gray u0026 Ch, employment consultancy The number of planned layoffs by U.S. companies climbed to a near five-year high in October as the economic outlook deteriorated, with the financial and auto sectors leading the way, according to a report by ristmas on Wednesday. Elsewhere, the economic outlook has been subdued, with U.S. companies planning to lay off 112,884 workers in October, up 19% from September. October was the worst month for layoffs of the year for a number of industries, including Industrial product manufacturing, consumer products, pharmaceuticals, food and electronics industries. (End)