Alert Sign Dear reader, online ads enable us to deliver the journalism you value. Please support us by taking a moment to turn off Adblock on

Alert Sign Dear reader, please upgrade to the latest version of IE to have a better reading experience


US payrolls figures give markets another lift

March 08, 2013

A worker wipes tabletops at an outdoor plaza ahead of the busy lunch hour in downtown Los Angeles in this January 6, 2012 file photo. The US jobs market brightened better than expected in February, with the unemployment rate falling and solid job growth, official data released on March 8, 2013 showed. -AFP Photo

LONDON: Markets were headed for a strong close to a historic week after the release of forecast-busting US payrolls figures for February.    

The Labor Department reported on Friday that the US economy added 236,000 jobs during the month, way ahead of expectations for a gain of about 170,000.

Some of the increase was offset by a downward revision to January's figure to 119,000 from an initially estimated 157,000.

Nevertheless, the fall in the unemployment rate, to 7.7 per cent in February from 7.9 per cent the previous month, confirmed that the US labor market is on the right track and reinforced the upbeat mood surrounding the US economy.

February's unemployment rate was the lowest since December 2009.

Hopes over the world's largest economy have largely been behind the rally in stock markets this year, which has seen the Dow hit a string of record highs this week, and Friday's figures added to the prevailing optimism.

In Europe, many of the leading stock indexes were trading at multi-year highs in the wake of the figures and some were edging up to all-time highs, too.

The FTSE 100 index of leading British shares was up 0.7 per cent at 6,485 while the CAC-40 in France rose 1.3 per cent to 3,844. Germany's DAX was 0.8 per cent higher at 8,003, its first foray above 8,000 since the start of 2008.

In the US, the Dow Jones industrial average briefly broke above 14,400 for the first time ever before settling back to trade 0.4 per cent higher at 14,390.

The broader S&P 500 index rose 0.4 per cent higher, too, to 1,550.

The payrolls figures have also given the dollar a further lift as investors think the run of positive news may prompt the US Federal Reserve to bring an end to its super-loose monetary policy sooner than previously thought.

Looser monetary policy tends to weaken a currency. Such expectations were also evident in the rise in the US Treasury yields in the wake of the figures.

The yield on the country's benchmark 10-year bond was up 0.06 per centage points at 2.06 per cent.

''With the decline in the headline rate of unemployment to its lowest in five years one has to ask whether this report is one small step for employees and one giant leap for the Federal Reserve,'' said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.

The euro was 0.9 per cent lower at $1.2985 while the dollar was 1.5 per cent higher against the Japanese yen, at 96.26 yen, its first foray above 96 yen since the summer of 2009.

The yen has also been on the retreat over the past few months amid expectations of a change in Japan's economic policy that will likely involve the Bank of Japan printing more money.

A lower yen has the potential to make Japanese exports cheaper and that's been at the heart of the Nikkei's recent surge.

Earlier, the index jumped 2.6 per cent to 12,283.62, its highest close since September 2008.

Elsewhere in Asia, Hong Kong's Hang Seng rose 1.4 per cent to 23,091.95 while Australia's S&P/ASX 200 rose 0.3 per cent to 5,123.40. Those in mainland China and Singapore fell.