The labour market is contracting in the U.S.

The economy in the United States remains stable in some of its components, but there are signs that the labour market is contracting. In August, U.S. firms cut payrolls by 4000 units, the first decline in four years.Employment growth has been constantly shrinking in recent months, as it is testified in the non-manufacturing sector, and could help the Federal Reserve to cut rates by at least 25 basis points to 5.00% during its September or October meetings. In reality, the unemployment rate remained at 4.6%, while the hourly wages were 3.9%, higher than the year before. Construction was down 22,000 jobs and manufacturing shed off 46,000 jobs. The service sector (restaurants, banks, retailers and insurance companies) rose 60,000 units, but the government employment cut off 28,000 units on the top of July¡¦s decline of 52,000. Housing is still in trouble waters and it might take some more time before reaching a bottom. In July, pending home sales, based on contract signings that could result in actual sales within a few months, declined 12.2% (-2.2% expected) to 89.9 from June¡¦s 102.4. They were 16.1% below July of last year and the lowest level of the past six years. Finally, non-farm productivity was revised upward in the second quarter to an annualized 2.6%, above the expected 2.3% increase. Unit labour costs, on the other hand, were revised downward to 1.4%. The overall picture remains nonetheless nebulous, as productivity has been steadily declining and labour costs are increasing.