Stock markets received a welcome fillip yesterday when US employment data turned out to be much more positive than analysts had expected. Una McCaffrey reports.
US employers added jobs last month for the first time in eight months, according to official numbers released in the early afternoon. Almost all commentators had predicted that jobs would be lost in September rather than gained.
The actual result supported the view that the US economy could be on the point of sustainable recovery and resulted in immediate stock-market gains.
By midday, the Dow Jones industrial average had surged by close to 2 per cent while the broader Standard & Poor's added a similar measure.
In Europe, the FTSE Eurotop 300 index of pan-European blue chips rose 2.6 per cent , while the narrower DJ Euro STOXX 50 index surged 3.5 per cent. The defensive face of the ISEQ once again prevented Irish stocks from sharing in the best of the upswing, with the market eventually closing just 0.7 per cent ahead.
In currency action, the dollar rose strongly against the euro, climbing to $1.156 from $1.1691 at Thursday's close.
"In a market that was desperate for any US positive news, this release will no doubt be seized upon as an excuse to buy the dollar after a week of continued dollar selling," said Mr Niall Dunne, financial markets economist with Ulster Bank.
He was reluctant to base any long-term forecasts on the jobs release however, highlighting that the volatile nature of employment data as a whole.
"Hopefully this stronger than expected release won't result in expectations becoming unrealistic again," he said.
The number of workers on US payrolls outside the farm sector grew by 57,000 last month, the first time since January that jobs were created. This was sharply contrary to economists' forecasts for a 30,000-job loss.
The gain was not big enough to bring down the unemployment rate, which was unchanged at 6.1 per cent in September.
The dollar vaulted higher in the wake of the jump in jobs, which implied US economic performance was outpacing other major regions.
IIB Bank chief economist Mr Austin Hughes said the numbers would lessen a general sense of nervousness in the markets.
"To the extent that it supports equity markets, it will also help confidence and may prompt a virtuous circle of healthier sentiment and spending."
Mr Hughes was also cautious however, pointing out that the US jobs market is "still far from robust".
"It should be recognised that today's data are consistent with a still modest pace of hiring in the States," he said. - (Additional reporting, Reuters)
