Now the cynics will say this US Labour Department report it isn't surprising at all, and ask me what the hell I am talking about, well I'll tell you, I had actually expected the momentum to continue for another couple of months before tapering off. This is relatively dramatic after the powering ahead of recent months. And of course, now the interest rate is really pinned down near ground level as far ahead as the eye can see. Looks like another bruising week ahead for the euro.
American employers barely took on any new workers in December, a disappointing government report on Friday showed, indicating the economic recovery has yet to translate into sustained jobs growth.
The unemployment rate fell to 5.7 percent, the lowest level in over a year and down from 5.9 percent in November. But this was largely due to people leaving the workforce, according to the Labor Department's report.
The number of workers on U.S. payrolls outside the farm sector in December increased by just 1,000, after a downwardly revised rise of 43,000 in November. It was the fifth consecutive monthly rise but was far worse than economist expectations of a rise of 130,000. The poor report will likely be a headache for President Bush (news - web sites) as he seeks re-election in November with the economy -- specifically job creation -- expected to be a key issue in the run-up to the vote. "This is a very disappointing jobs report," said John Person, head financial analyst, Infinity Brokerage Services, Chicago. "One component to prove that the economy is on a solid path to recovery is an increase in jobs." The dollar fell and U.S. Treasury bond prices rose after the report. The data will likely reinforce expectations that the U.S. Federal Reserve (news - web sites) will keep interest rates on hold at 45-year lows at its next policy meeting on Jan. 27-28, and for some time after that.
"The good news is that there is absolutely no pressure on the Fed to raise rates any time in the foreseeable future," said Edgar Peters, chief investment officer, Panagora Asset Management Inc. The jobless rate had been forecast to hold steady at 5.9 percent. The Labor Department, though, said there were 433,000 "discouraged" workers in December, who were not looking for work because they believed no jobs were available. Economists had been expecting a more robust rise, encouraged by a reasonable holiday shopping season and a drop in filings for jobless benefits in December. However, the report showed a 38,000 fall in hiring in the retail sector, which the department said was due to general merchandise stores taking on fewer workers than usual.
The troubled manufacturing sector failed to break its job-cutting trend, shedding 26,000 jobs in December, the 41st month of declines. Some economists, pointing to recent data suggesting a turnaround in manufacturing, had predicted factories would finally take on new workers in December. In another bad sign for job seekers, the number of hours worked per week dropped to 33.7 from 33.9 in November. The average work week had been expected to climb to 34.0 hours. Employers often increase the amount of hours worked by existing workers before taking on new hires. One bright spot in the report was hiring in construction, which was up 14,000. The building industry has boomed as low mortgage rates have fueled home buying.