The downturn keeps getting worse in the United States, where new unemployment figures from the US Department of Labor show the country’s jobless rate has hit a 25-year-high of 8.1%. The figures show 651,000 jobs were lost during January and December, while a total of 4.4 million jobs have been lost since December 2007. Over half of those jobs have been lost in just the last four months.
But Wall Street investors were encouraged, as the drop was not as big as some predicted. The Dow Jones Industrial Average closed up 32.5 points on Friday night to 6626.94.
The Australian sharemarket has opened 0.5% higher after the slightly positive leads from New York and small rises in commodity prices.
The benchmark S&P/ASX200 index was up 21.3 points or 0.68% to 3166.9 at 12.10 AESDT. Trading volumes are down due to the public holiday in some states. The Australian dollar also slipped back to US64 cents.
NAB shares have lost 1.4% to $16.56, while Commonwealth Bank has dropped 1.1% to $26.71. ANZ has gained 1.3% to $12.52 as AMP dropped 3.9% to $3.68.
Investors are bracing for a difficult few weeks as come of the largest companies in the US remain on the brink of collapse, including Citigroup and General Motors.
Senator Richard Shelby, who sits on the Congressional Banking Committee, told US television that the banks should be closed down. “Close them down, get them out of business. If they’re dead, they ought to be buried,” he said.
Senator John McCain, who lost to President Barack Obama in last year’s election, also called for the banks to fall.
“I don’t think they made the hard decision and that is to let these banks fail,” McCain told Fox News.
McCain also said GM must declare bankruptcy.
“I think the best thing that could probably happen to General Motors, in my view, is they go into Chapter 11,” he said.
“They reorganise, they renegotiate their union-management contracts and come out of it a stronger, better, leaner and more competitive automotive industry.”
The company has already announced that filing for bankruptcy is not an option, as such a move would affect sales.
Turnbull wants tax cuts, business assistance
Back in Australia, Opposition leader Malcolm Turnbull has once again called on the Government to bring forward the tax cuts scheduled for the next financial year to stimulate the economy.
“What I would do is: I would bring forward the tax cuts from July 1 this year and July 1 next year because that stimulates the overall economy,” Turnbull said.
“I would take the burden of employing people or part of the cost of employing people off the shoulders of small business and that Government rebate a portion of the superannuation guarantee contribution for small businesses.”
Workers’ morale is low
Meanwhile, company downsizing is both decreasing staff morale and failing to increase productivity, a new report shows.
A survey of 6300 workers and managers from human resources group Drake International shows 40% of staff become less motivated after staff downsizing, with productivity improved in just over one-fifth of downsizing experiences.
“Only one year ago employers were investing heavily to attract new staff to deal with critical skills shortages,” strategic manager David Edwards says. “Today the same employers are not only losing critical skills, which will be hard to replace once the upturn occurs, but they are also damaging their hard-won reputations as employers of choice.
“Organisational restructure should be about working smarter by changing processes and redesigning job roles. However, this survey reveals that most employers expected to achieve downsizing benefits by asking staff to work harder.”