Upbeat US job figures send markets soaring

Unemployment rate falls as experts say figures indicate end of the recession
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The Independent Online

Job losses slowed and unemployment fell in the US last month, it was announced yesterday – a surprising piece of news that prompted experts to call the end of the recession.

The US Department of Labour released non-farm payroll employment figures which showed that 247,000 jobs were lost in July, compared with the forecast of 328,000.

The unemployment rate was down slightly at 9.4 per cent, equivalent to about 14.5 million people, from 9.5 per cent in June. Jan Hatzius, the chief US economist at Goldman Sachs, had predicted on Thursday that it would climb to 9.7 per cent. The US Federal Reserve forecast last month that unemployment would pass 10 per cent by January after hitting a record level last month. Yesterday's improvement was the first since April last year.

John Lonski, a US economist at Moody's Investors Service, said: "This is better than expected news; the dip in unemployment was a surprise. The report is very much in keeping with the idea of a presence of a brand new economic recovery. It is not a robust recovery, but a relatively anaemic one, but a recovery nonetheless."

America's gross domestic product should rise by the third quarter and that should mean more good news for the unemployed, Mr Lonski said. "Today's announcement is significant. It is consistent with other indicators suggesting the recession ended in June," he added.

The new data buoyed the stock markets, sending the benchmark Dow Jones and S&P 500 indices to new highs for the year in early trading on Wall Street. The dollar also rose against the sterling. However, the number of longer-term unemployed people, who have been without work for 27 weeks or more, was up by 584,000 at 5 million, meaning one in three had been jobless for almost seven months.

The number of those who wanted full-time work but had to go part-time was flat at 8.8 million – little changed in four months after a spike during the autumn and winter. Job cuts continued in many of the major industries in July, the statistics showed.

Employment in construction, for example, contracted by 76,000 in July, slightly higher than the average for the previous three months.

Factory jobs fell by 52,000, professional services were down 38,000 and those in the retail trade by 44,000.