US Unemployment Falls

The markets today received mixed signals from the latest US economic data as unemployment dipped in September despite thousands of job losses.

Unemployment fell to 5.6% last month from 5.7% in August as the world's largest economy produced more than enough new jobs to offset layoffs by businesses.

September's jobless rate was the lowest in seven months and was better than many analysts had forecast. Less encouraging however, was a separate government survey of businesses.

This research showed employers slashed 43,000 jobs last month - the first such cut since last April. Muddying the waters further, the same survey showed that 107,000 jobs were created in August - much more than the 39,000 positions previously estimated.

Some 711,000 people found work in September - increasing the ranks of the employed nationwide to 135.2 million. That more than made up for the jobs cuts, in which manufacturing and transport were worst hit.

Today's data did little to indicate the direction of the economy. Economists have already pared back growth estimates for the US as the economy remains sluggish despite the lowest interest rates for 40 years.

Markets have declining steadily throughout the year with confidence undermined by a combination of scandal and profit warnings.

In the latest downbeat news from corporate America, drugs group Schering-Plough warned that earnings in 2003 and 2004 would be far below Wall Street forecasts. Meanwhile aluminium giant Alcoa said profits fell sharply on lower prices because of a worldwide glut of aluminium and slow economic growth.

"The sentiment is still awful. People are scared to buy stocks," said Anthony Iuliano, head equity trader for Glenmede Trust.