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The U.S. unemployment rate fell to a 2-1/2 year low in November, even though the pace of hiring remained too slow to suggest a significant quickening of the recovery.
Nonfarm payrolls increased by 120,000 jobs last month, the Labor Department said on Friday, and the jobless rate dropped to 8.6 percent, the lowest since March 2009, from 9.0 percent in October.
It was the biggest monthly decline since January. While part of the decrease was due to people leaving the labor force, the household survey from which the department calculates the unemployment rate also showed solid gains in employment.
“The economy is continuing to head in the right direction,” said Millan Mulraine, senior macro strategist at TD Securities in New York. “However, the ultimate test of the sustainability of the recovery is for the economy to create a sufficient number of jobs to sustain a consumer-led rebound in activity.”
“On this measure, this report falls short,” he said.
Although the gain in the number of jobs created as measured by the survey of employers was relatively modest, it marked a pickup from October’s upwardly revised 100,000 increase.
In all, 72,000 more jobs were created in October and September than previously reported.
The retail sector accounted for more than a third all new private sector jobs in November as shops geared up for a busy holiday season, but average earnings fell two cents.
Data ranging from manufacturing to retail sales suggest the U.S. economy’s growth pace could top 3 percent in the fourth quarter, an acceleration from the third quarter. In contrast, much of the rest of the world is slowing and the euro zone appears to have already fallen into recession.
Stocks on Wall Street opened higher on both the employment report and growing optimism of a solution to the European debt crisis, while prices for U.S. government debt fell. The dollar was little changed against a basket of currencies.
The report could temper the appetite among some Federal Reserve officials to ease monetary policy further.
In forecasts released earlier this month, the Fed said the jobless rate would likely average 9 percent to 9.1 percent in the fourth quarter. It did not expect it to drop to an 8.5 percent to 8.7 percent range until late next year.
via reuters
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European Central Bank President - Mario Draghi
European stocks fell and the euro slipped against the dollar after comments by European Central Bank President Mario Draghi were laced with caution, tempering the positive sentiment following Wednesday’s coordinated liquidity moves by central banks.
Draghi, speaking to the European parliament on the joint measures by banks, warned that downside risks to the economic outlook have increased and he also cautioned that dysfunctional government bond markets in several euro-area countries are hampering single monetary policy. In addition, the ECB’s president said the central bank’s bond purchases can only be limited.
Newedge economist Annalisa Piazza said, “The ECB stands ready to act to face the current challenges, both with standard and non-standard measures. However, Draghi said the importance of the creation of a commonly shared fiscal consolidation. In a nutshell, we see the ECB to continue to provide support in the direction of reducing the current imbalances. However, its independence is re-affirmed.”
By 0910 GMT, the Stoxx Europe 600 index was down 0.7% at 238.40. This follows a gain of 3.6% on Wednesday, the biggest percentage gain since Aug. 12. London’s FTSE 100 fell 0.3% to 5489.11, Frankfurt’s DAX declined 0.8% to 6041.70 and Paris’s CAC-40 was 0.9% lower at 3125.85.
Cyclical stocks were leading the declines, with investors taking advantage of the strong gains in the previous session and taking profits. The Stoxx Europe 600 construction and materials sector was down 1.6%, the basic resources index was 1.4% lower and the insurance index was down 1.3%. Cyclical sectors, which are sensitive to the economy, all rose strongly on Wednesday after the Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank agreed to lower the pricing on existing temporary U.S. dollar liquidity swap arrangements by 50 basis points.
However, despite the action, the underlying issues affecting the European sovereign debt crisis remain unsolved. Indeed, Goldman Sachs said in the near term, it expects European equity markets to fall further as recession is priced in and earnings downgrades accelerate. The investment bank announced a more defensive stance in its portfolio, downgrading the banking, industrial goods and services, basic resources, food and beverages, and autos sectors. It upgraded technology and health care.
Meanwhile, euro-zone purchasing managers index manufacturing data were in line with expectations, confirmed at 46.4 in November. The index is at its lowest level since June 2009 but still 13 points higher than its record low. The data had little bearing on markets.
Earlier, Asian stock markets surged Thursday following the moves by major central banks Wednesday to lower dollar funding costs for European banks and after the People’s Bank of China cut its reserve requirement ratio for the first time in over three years.
Hong Kong’s Hang Seng Index advanced 5.6%, while China’s Shanghai Composite advanced 2.3%. Japan’s Nikkei Stock Average rose 1.9%, Australia’s S&P/ASX 200 climbed 1.9%, and South Korea’s Kospi Composite jumped 2.3%.
The Indian rupee slumped to a new all-time low against the U.S. dollar Tuesday as importers continued to scoop up the greenback on fears that the local currency would weaken further in the absence of aggressive central bank intervention
The dollar was quoting at 52.48 rupees at 0339 GMT, compared with its previous record low of 52.1950 rupees on March 3, 2009.
The Indian rupee has of late been Asia’s worst-performing currency, weakening 17% against the dollar since April.
A wave of risk aversion sparked by the crisis in Europe has unnerved investors concerned also about India’s high inflation, slowing economic growth and gaping fiscal deficit.
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