Okuma Group: Is US Recovery Losing Steam?

Online, July 8, 2010 (Newswire.com) - TOKYO (Reuters) - Okuma Group, the Asia-based investment boutique, says that the worse-than-expected US non-farm payrolls figures for May should not come as a surprise to anyone living in the real world reasoning that it was always just a matter of time before the effect of the massive stimulus thrown at the US economy by the government began to wear off.

According to the Labor Department figures, of the 431,000 jobs added in May, only 41,000 were created by the private sector with the remaining 390,000 being temporary workers hired by the government to conduct the 2010 census.

The "Okuma Group" analysts said that the jobs recovery to which so many commentators have pinned their hopes for the US economy is "a mirage" driven almost entirely by government spending. They warned that if future jobs data pointed to the development of a downward trend, the US government could resort to taking far more reckless and profligate measures to get the unemployed into work including further stimulus which could push America's fiscal deficit to dangerous levels and result in an EU-style debt crisis.

In response to the data, the Dow Jones Industrial Average plunged by over 300 points as investors became more concerned about the sustainability of the economic recovery.

"Okuma Group" said that unrelenting concerns about the European debt crisis added impetus to the falls since Europe is the destination for a significant percentage of US exports.

"Okuma Group" told clients to expect equities to return to the March 2009 lows.