View from City Road: Spin doctors polish US figures

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The Independent Online
The Clinton administration wheeled out its biggest guns yesterday, anxious to play down the idea that the latest set of economic figures signalled bad news on inflation.

The spin doctoring seemed to meet with some success; after initially taking fright at a much bigger drop than expected in the May unemployment rate, the markets shifted their gaze to the payroll figures, which pointed in exactly the opposite direction.

With the two surveys giving contradictory signals, the pundits justified their own jobs arguing the toss - though in the end they appeared to give the payroll figures, based on surveys completed by employers, the benefit of the doubt. The argument that the unemployment figures, based on a household survey and subject to a rather doubtful seasonal adjustment, were less reliable seemed to have the edge.

But even if the markets were superficially reassured, there is no guarantee the independently minded Federal Reserve Board will feel the same way when it meets on 5 July.

As Katharine Abraham, the US Labour Bureau's statistics commissioner, had to admit, there is no dispute that the unemployment trend is firmly down. While last February's shock precautionary interest-rate rise has undoubtedly had some dampening effect - mortgage refinancing has virtually come to a standstill - the view persists that next month the Fed will have to go further if inflation is to be kept under control.