(By Salman - iStockAnalyst Writer)U.S. stock-index futures extended losses after employers cut more jobs than forecasted in August, sending the unemployment rate to a five-year high. At 8:48 am (ET) DJ Stoxx 600 was down 4.83 (-1.74%) to 273.35.
Payrolls fell by 84,000 in August, and revisions added another 58,000 to job losses for the prior two months, the Labor Department said today in Washington. The jobless rate jumped to 6.1 percent, matching a high reached in September 2003, from 5.7 percent the prior month. A median forecast by 87 economists in a Reuters poll anticipates the Labor Department will report employers cut 75,000 jobs outside the farm sector in August after dropping 51,000 in July.
Payrolls at builders fell 8,000 after decreasing 20,000. Financial firms trimmed payrolls by 3,000 for a second consecutive month. Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 27,000 workers after cutting 12,000 in July. Retail payrolls fell by 19,900 after a drop of 18,100. Government payrolls increased by 17,000 after rising 6,000. That meant private payrolls fell by 101,000 in August.
Today's report brings the total decline in payrolls so far this year to 605,000. The economy created 1.1 million jobs in 2007.
The average work week remained at 33.7 hours. Average weekly hours worked by production workers fell to 40.9 hours from 41 hours, while overtime decreased to 3.7 hours from 3.8 hours.
Workers' average hourly wages rose 7 cents, or 0.4 percent, to $18.14 from the prior month. Hourly earnings were 3.6 percent higher than August 2007. Economists surveyed by Bloomberg had forecast a 0.3 percent increase from July and a 3.4 percent gain for the 12-month period. Average weekly earnings increased to $611.32 from $608.96.
General Motors Corp.(NYSE:GM), United Technologies Corp (NYSE: UTC). and Home Depot Inc. (NYSE: HD) all retreated more than 1 percent.
Merrill Lynch & Co.(NYSE: MER) tumbled after Goldman Sachs Group Inc. advised selling shares of the third-biggest U.S. securities firm on expectations it may post more writedowns tied to credit-related investments.
Nokia (NYSE: NOK) had the biggest decline in almost five months in European trading. Nokia Oyj, the world's biggest maker of mobile phones, forecast a drop in third-quarter market share after competitors slashed prices and a new handset was delayed. Nokia fell 1.74 euros, or 11 percent, to 13.96 euros as of 2:20 p.m. in Helsinki. The drop was the biggest since April 17.
Europe too was trading in red in the afternoon session. At 13:52 am London Time, FTSE, DAX and CAC were down more than 1 percent. European Central Bank President Jean- Claude Trichet and council members Juergen Stark and Ewald Nowotny signaled they're still concerned about inflation even with the euro-region economy on the brink of a recession.
The ECB will do ``whatever needed to deliver price stability,'' Trichet said at a conference in Frankfurt today. At the same event, Stark said inflation is at ``worrying levels'' and Nowotny, who joined the ECB board this month, said in Vienna it's too soon to sound the all-clear.
Dollar, which was ruling quite high earlier, gave away most of the gains against the Euro after the unemployment data. Crude Oil was trading in red before the opening bell.
