Manufacturing in sharp April drop

10 June 2011 Last updated at 12:30 GMT Thousands of people lined the streets on the day of the royal wedding, an extra bank holiday on 29 April UK manufacturing saw its biggest monthly drop for almost two and a half years in April, figures show, as the royal wedding bank holiday and the Japanese tsunami hit production.

Manufacturing output fell by 1.5% between March and April, the Office for National Statistics (ONS) said.

The ONS compared the month with June 2002, the month of the Queen's Golden Jubilee, when manufacturing fell 5.4%.

Economists played down the significance of the data, saying it was distorted.

Manufacturing ouput was up 1.3% on April last year.

'Overstated'

The ONS said April 2011 was an "unusual" month for a number of reasons, namely the special bank holiday created for the royal wedding, the royal wedding itself and the effects of the Japanese tsunami.

It said it had also heard from a number of car manufacturers who said that "the after-effects of the tsunami in Japan reduced production levels in April 2011, due to a lack of parts".

Peter Dixon, economist at Commerzbank, said he would not take the figures at face value.

"There is weakness in the manufacturing sector, that's clear," he said. "But I think this figure overstates it and you wouldn't want to pin too many assumptions on one number.

"My guess is that part of this will be recouped in subsequent months. It's very much reminiscent of what happened in 2002 following the Golden Jubilee celebrations. We had some terrible numbers... but thereafter we got something of a rally."

In June 2002, an extra bank holiday was created for the Golden Jubilee and the May bank holiday was also moved to the start of June.

The wider index of production, which includes sectors such as mining and energy supply, fell 1.7% on the month and 1.2% on the year.

The ONS also said that the warm weather had an impact on the energy sector.

April 2011 was the warmest April on record, and reduced demand led to electricity supply ouput falling 4.3% from March and gas supply output falling 11.2% on the month.

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US employment in sharp slowdown

3 June 2011 Last updated at 14:42 GMT Despite the slowdown, it was the eighth consecutive month of positive jobs growth in the US US employment growth slowed sharply in May, with only 54,000 net new jobs added during the month.

Markets had expected a rise of 150,000. It follows a downwardly revised but still rapid 232,000 increase in April.

Despite the slowdown, it was the eighth month in a row of positive employment growth, according to data from the US Labor Department.

The unemployment rate also rose unexpectedly to 9.1%, from 9% a month earlier.

The number of unemployed remained largely unchanged at 13.9 million, but the number of long-term unemployed - out of work for more than 26 weeks - rose by 361,000 to 6.2 million.

Stock market jitters

The private sector created 83,000 new jobs in the month, while local governments reduced their headcount for the the 22nd month in a row, by an unusually large 28,000.

"Job gains continued in professional and business services, health care, and mining," said the Bureau of Labor Statistics.

Total employment in the US still remains nearly 5% below the pre-recession peak it registered nearly three-and-a-half years ago, in what has been the worst jobs recession since World War II.

The employment and unemployment figures are collected using different methods.

Stock markets fell sharply following the data release, with the FTSE 100 index falling 0.8% immediately following the announcement.

The Dow Jones dropped 1.2% at the start of trading, before recovering during morning trading in New York.

Continue reading the main story Jonny Dymond BBC News, Washington

Foul weather, high energy prices and the earthquake in Japan are being blamed for the bad news on jobs. But it may be the broader picture that is most troubling.

The manufacturing surge has failed to lead to significant new hiring and a property market that is still on its knees is dragging down growth.

Unemployment had fallen steadily from December To April, but since then it has climbed. The country is not generating nearly enough jobs to soak up new entrants into the labour market, let alone re-engage the millions that lost their jobs in the recent severe recession.

After two big economic stimuli and significant monetary intervention, the government's economic armoury is looking pretty bare. That leaves President Obama in a tough place. Jobs - or the lack of them - have overshadowed his time in office. Few get re-elected with jobs numbers like these.

Recession fears The figures echo similarly disappointing US economic data released in the past week, including apparent slowdowns in the manufacturing sector and in consumer spending.

It all points to a marked slowdown in the US economy during the second quarter of the year, according to Nigel Gault, chief US economist at IHS Global Insight.

"[The jobs report] is weak across the board," he said. "We can't point to any one special factor and say that makes this an aberration."

However, he remains upbeat about the outlook for the second half of the year: "We have seen some easing in commodity prices, gasoline prices are starting to come down, and the bad effects on vehicle production of the Japanese problems will start to unwind."

But the figures may resurrect fears of a possible slide back into recession, analysts warn.

And that prospect will fuel speculation that the US Federal Reserve may embark on a third round of "quantitative easing" - purchasing government bonds to pump more cash into the financial system - later this year.

"Arguing about the merits of whether QE3 would be a good idea, is irresponsible right now," said Tod Schoenberger, managing director at Landcolt Trading in Delaware.

"It would be proactive for the [Federal Reserve's monetary policy committee] to discuss and develop a strategy for implementing QE3, because it's painfully clear the United States is headed for a very messy second half of 2011."

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