In a big boost for President George Bush, the United States unemployment rate fell in October and the economy created thousands of new jobs for the third consecutive month.
While the headline jobless rate fell slightly from 6.1 per cent in September to 6 per cent last month, the really good news for the White House was the 126,000 surge in payrolls in October, following an upward-revised 125,000 increase in September, and a smaller advance in August. The upturn follows six straight months of job losses.
The news could not have come at a better time for President Bush, as public opinion turns increasingly against his handling of the Iraq crisis, less than a year before he faces voters in November 2004.
However, the employment figures, hard on the heels of the 7.2 per cent third-quarter growth in GDP announced last week, provide new evidence that the economy, the other big threat to his chances of winning second term, may finally have turned the corner.
The figures helped boost the FTSE 100 index. It closed at a 14-month high of 4,376.9, up 52.7. Traders said upbeat economic signs on both sides of the Atlantic, plus long-awaited restructuring by German companies, sparked new confidence in the market. Jason James, the head of global equity strategy at HSBC, said the jobs figures in America suggested the final pieces of recovery there were beginning to fall into place.
This week even the famously cautious Alan Greenspan described the short-term economic outlook as "relatively optimistic" - though the Fed chairman made clear he would not be rushed into raising interest rates, currently at their lowest level in 40 years.
Since the recovery began in late 2001, productivity has risen at 5 per cent a year, far outstripping the growth of output. The result has been the so-called "jobless recovery" that has so worried Mr Bush's political strategists. In all, more than 2.5 million jobs have disappeared since he entered the White House, kindling fears that the US could be on the brink of a damaging deflationary spiral - and, indeed, even if the administration can meet its goal of 200,000 new jobs a month, this president could yet end up as the first since Herbert Hoover to preside over a shrinking labour force. But for the first time since 2002, most Americans, 53 per cent, believe the economy is improving, according to a new Gallup poll. This compares with 47 per cent in late October, and a low of 23 per cent in March.Reuse content