Fresh signs of US slowdown

Hiring is close to 1981 and 1991 levels

More signs of the slowdown in the US economy were evident on Monday with house sales falling and a downbeat jobs survey.

Sales of non-new homes fell quicker than expected during July, suggesting the economic slowdown is finally beginning hit the consumer.

Meanwhile a quarterly employment survey released by the Manpower staffing agency said hiring by US employers was not expected to increase during the fourth quarter.

There was more bad news on the jobs front with the farm equipment maker Deere & Co announcing it was cutting 2000 jobs.

House sales fall

Sales of existing homes account for about 85% of all homes sold in the US, so the figures are seen as an important indicator as to the state of the housing market.

Until now the buoyant state of the market and consumer sector in general has helped offset the decline in US manufacturing.

But Monday's figures from the National Association of Realtors suggest the US slowdown is now hitting the housing sector, with sales down 3% in July.

Analysts had been forecasting a fall of only 1.3%.

"Given the huge volume of home sales over the last five years, we are still seeing a very strong demand but the pressure is starting to ease," said David Lereach, the association's chief economist.

Employment stalls

A survey released by the employment agency Manpower said the number of new people being taken on by US employers was approaching the lows of the last recession.

Manpower's latest quarterly Employment Outlook Survey found just 24% of employers were planning to take on more staff during the fourth quarter of this year.

That was down from 32% in the same quarter last year.

"The key segments of durable and non-durable goods manufacturing project year-end hiring at levels approaching those experienced in the recession years of 1981 and 1991," said Manpower's chairman and chief executive Jeff Joerres.

Deere cuts 2000 jobs

There was more bad news on the jobs front from the farm equipment maker Deere & Co.

The company said the tough economic conditions meant it was cutting 2000 jobs.

The company said it would sell its Homelite division - which makes lawn-care equipment - and restructure its construction and forestry division.

"These actions send a clear signal that we are not content to simply wait for the economy to improve in order to make our businesses more profitable," the company's chief executive Robert Lane said in a statement.

Inflation warning

Finally there was a warning on Monday that the US should keep an eye on inflation when it finally emerges from the current slowdown.

The warning came from the Nobel prize winning economist Milton Friedman in an interview with the Italian newspaper Corriere della Sera.

Last week the US Federal Reserve cut the US base rate for the seventh time this year and it now stands at 3.5%.

But Mr Friedman says the Fed could be stoking up inflationary pressures.

"The key problem once the recession ends in 2002 will be how to control inflation" he is quoted as telling the paper.

"It was the right policy to give the economy a push, but in the long term it was too inflationary," he added.