Wall Street soars after weak payroll figures
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.News of a decline in the number of jobs in America sent share prices higher yesterday, taking the Dow Jones index closer to the magic 6,000 level.
The number of people on the non-farm payroll, the totem statistic on which financial markets have fixed for clues about the next move in US interest rates, fell by 40,000 last month. The first drop since January, it confounded expectations of an increase of around 170,000.
The Dow Jones closed 60 points higher at 5,992.86. Shares in London ended up nearly 25 points at 4,024.8.
The surprise drop in the number of jobs reported by firms vindicated the Federal Reserve's surprise decision two weeks ago to leave the level of interest rates unchanged despite signs of stronger-than-expected economic growth. The Fed's policy committee does not meet again until 13 November, after both the presidential election and another month's worth of economic statistics.
But economists said the jobs market was not as weak last month as the headline figure suggested. Average wages and hours worked both increased. And an alternative jobs count, the civilian employment figure calculated from a survey of households, showed a substantial increase in September.
Mark Cliffe at HSBC Markets said: "There is an unmistakable upward trend in wage inflation." He said the Fed would be able to keep its powder dry for now, but would have to raise interest rates if wage increases picked up further.
Chris Iggo, an economist at Barclays in New York, said: "The headline number overstates the extent of the weakness although there has clearly been a slowdown in the momentum of jobs growth."
According to Harvey Hamel, an economist at the US Labor Department: "The numbers show a weaker labour market throughout the economy." But it was employment in the government sector and manufacturing that dropped during the month.
Employment in manufacturing fell by 57,000, after increasing in July and August. There were 9,000 new construction jobs. However, employment in services increased by 54,000, and there were 22,000 new jobs in retailing.
There were clear signs in the figures for hours and earnings that the labour market remained tight last month. Average weekly hours rose to 34.7 from 34.5 the previous month. Average earnings per hour climbed to $11.92 from $11.86.
Separate figures yesterday showed that the German economy was recovering from its slowdown. New orders in manufacturing rose 0.6 per cent, their third consecutive increase. Domestic orders were down, but export orders rose 3 per cent.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments