More uncertainty over US economy

Layoffs among American firms fell 11% in November, according to a report released on Tuesday from outplacement firm Challenger, Gray & Christmas.

And job cuts fell to 157,508 last month from 176,010 in October, a sign the economy may be on the rebound despite a historically high number of layoffs this year.

But while the figures are encouraging at first glance, the high level of redundancies suggests there could be more trouble ahead, according to John Challenger, chief executive at Challenger Gray.

He says the data are "a sign that some of the optimism of the last two months should be tempered, especially the optimism recently over the steep drop in new weekly unemployment claims".

Economic data have been rife with volatility in 2002, Mr Challenger told BBC News Online, "and this report does suggest that we're not out of the woods yet."

Reluctant business

A lackluster snapshot of the US manufacturing sector, also published onTuesday, underscored the uncertainty surrounding the country's economic outlook.

The Institute for Supply Management's closely watched manufacturing index edged up to 49.2 points in November from 48.5 in October.

A reading above 50 represents an expansion of business activity, while a number below 50 denotes contraction.

Monday's number was smaller than expected, and marked the third month in a row manufacturing has shrunk.

Analysts bemoaned the report, saying it was further proof of the US economy's heavy reliance on consumer spending.

Business, meanwhile, remains reluctant to invest amid an uncertain economy.

"The trend is well established that the overall economy is holding up but the manufacturing sector is feeling the brunt of the downturn," said Norbert Ore, director of the ISM survey.

"There are not really any signs of potential change, either upward or downward," he added.