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Positive US jobs numbers add to rate rise speculation | |
(35 minutes later) | |
The US economy added a net 195,000 new jobs in June, official figures show. | The US economy added a net 195,000 new jobs in June, official figures show. |
The figure was well above market expectations for just 165,000. Revisions to data for April and May added a further 70,000 jobs to previous estimates. | The figure was well above market expectations for just 165,000. Revisions to data for April and May added a further 70,000 jobs to previous estimates. |
The jobless rate held steady at 7.6% of the workforce, according to the data from the Bureau of Labor Statistics. | |
The dollar and US bond yields jumped as markets expectations rose that interest rates will start rising in a year. | |
The euro fell two-thirds of a cent against the dollar to $1.283. | |
The yield on 10-year Treasury bonds rose from 2.5% to 2.68% to their highest level in almost two years. | |
Treasury bonds - the US government's cost of borrowing - provide an indication of when markets expect the US Federal Reserve to begin raising interest rates, with many analysts now predicting that a move could come as soon as the end of 2014. | |
The news was received positively on Wall Street, where the Dow, S&P 500, and Nasdaq all opened higher. | |
"US employment data came out on the strong side of expectations," wrote Brown, Brothers, & Harriman in a note to clients. | |
"The jobs data will strengthen expectations of tapering Fed asset purchases," | |
Economists paid close attention to the number this month due to concerns that the US Federal Reserve might begin to wind down - or "taper" - its policy of propping up the US economy by buying up debts with newly-created money. | |
Comments by chairman Ben Bernanke in June that indicated that positive economic data in the coming months might lead to tapering of the Fed's bond buying had roiled markets. | |
Sequester fears | Sequester fears |
If the US economy continues to add jobs at this pace, the unemployment rate should fall from its current 7.6% to 6.5% by the end of 2014. This is the number the Fed has said the US jobs market must reach before it will end its programme of suppressing rates. | If the US economy continues to add jobs at this pace, the unemployment rate should fall from its current 7.6% to 6.5% by the end of 2014. This is the number the Fed has said the US jobs market must reach before it will end its programme of suppressing rates. |
Leisure and hospitality jobs saw the biggest gains in June, as employers hired workers for the summer season. | |
The data eased fears that the "sequester" - a package of austerity measures that hit the economy in January - would have a negative impact on the jobs market. | The data eased fears that the "sequester" - a package of austerity measures that hit the economy in January - would have a negative impact on the jobs market. |
The government shed 7,000 jobs in June, slightly less than expected. | |
Manufacturing, once a bright spot of the recovery, has continued its recent trend of job losses. | |
This has prompted some to question President Barack Obama's commitment to the manufacturing sector. | |
"The president laid out a goal of creating a million new manufacturing jobs in his second term. That effort is off to a terrible start," said Scott Paul, president of the Alliance for American Manufacturing, an industry trade group. | |
The broader rate of unemployment - which includes those who would like a full-time job but can only find part-time work, as well as those who have given up looking for a job - increased slightly in June to 14.3%. | The broader rate of unemployment - which includes those who would like a full-time job but can only find part-time work, as well as those who have given up looking for a job - increased slightly in June to 14.3%. |