Double-dip recession fears ease in US
Friday 07 October 2011
Double-dip recession fears in the US eased today after a better-than-anticipated jobs report for September.
US firms created 103,000 jobs, against economist expectations of 60,000, but the additional hiring was not enough to lift the overall unemployment rate, which stayed at 9.1% for the third month in a row.
The data gave markets across Europe a modest boost with the FTSE 100 Index up more than 70 points soon after the figures were released, though the UK's top flight eased back subsequently.
Andrew Wilkinson, chief economic strategist at Miller Tabak & Co, said: "In the big picture, today's reading soothes recessionary fears."
Companies with large US businesses led the rally. Building supplies firm Wolseley, which generates 40% of revenues in the country, topped the FTSE 100 risers while there were also good gains for Holiday Inn and Crowne Plaza hotel group InterContinental.
The US labour department also raised its estimates for the number of jobs created in the previous two months. Non-farm payrolls, or new jobs added, rose by 57,000 in August and by 127,000 in July, according to the revised data.
But Rob Carnell, analyst at ING Bank, warned against reading too much into the figures.
He said: "Overall, this month's labour market report was as unexpectedly good as last month's was unexpectedly bad. This is still not a strong labour market."
Economists also pointed out that 45,000 of September's jobs increase came from a return to work from striking workers at telecoms firm Verizon.
Construction, healthcare, and professional and business services sectors saw the largest gains last month, while government employment edged down.
President Barack Obama has made jobs a key part of a plan to get the US economy moving again. He has proposed a 447 billion US dollar (£290 billion) initiative to create 1.9 million new jobs and cut the rate of unemployment by one percentage point.
The US Federal Reserve has also launched Operation Twist, a 400 billion US dollar (£260 billion) bond buying scheme, in a bid to drive down long-term interest rates and cut borrowing costs for firms and individuals, though many economists expect a further round of quantitative easing is also on the way as well.
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