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USA jobs news gives Fed chair Yellen tough start

  • by MARTIN FLANAGAN
 

SURPRISINGLY weak US job figures jolted financial markets yesterday, sparking doubts about any honeymoon period with incoming new Federal Reserve chair, Janet Yellen.

The US labour department said non-farm payrolls rose just 74,000 in December, the smallest gain in three years.

Marcus Bullus, trading director at MB Capital, said: “If ever there was a curveball, this was it. These limp numbers are as puzzling as they are surprising – and caught the markets with their guard down.

“For the US economy to have added fewer than half the number of jobs expected is a serious worry – and the first stumble in what had begun to look like a relentless rate of job creation.

“All bets are now off on the Fed’s tapering plans. Many are now questioning whether it began to turn off the QE [quantitative easing or bond-buying] taps too soon.”

Yesterday’s data cut the American unemployment rate to 6.7 per cent from 7 per cent when the expectations were for a much bigger reduction as part of a strong US economic rebound.

Michael Hewson, chief market analyst at CMC Markets UK, commented: “Europe’s markets have enjoyed a good session today though they have retreated from their best levels of the day after US non-farm payrolls numbers missed expectations by a mile, coming in well below expectations of 195,000 new jobs.” Yellen succeeds Ben Bernanke as the Federal Reserve’s chair on 1 February.

 

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