US jobs boost gives FTSE a lift

BRITAIN’S benchmark FTSE 100 index powered to its highest level for more than six months last night as strong US jobs and manufacturing figures raised hopes that a double dip recession can be avoided.

The index of the UK’s leading shares rose 1.8 per cent, or 105 points, to close at 5,901.07, the highest since early August.

During the afternoon session, the US labour department said companies had hired 243,000 employees in January, the strongest jobs growth in nine months. The increase pushed the unemployment rate down to 8.3 per cent in January, the fifth consecutive month of improvement.

The last time that the jobless rate was as low was almost three years ago, before it started to rise in earnest following the recession of 2008-9. US factory orders also increased for a second straight month during December.

The data boosted Wall Street by more than 1 per cent in early trading and sent prices of treasuries, a traditional safe-haven for investors, plunging.

The UK’s recovery hopes were also boosted after optimism among services firms showed a record leap in January and job creation in the sector hit a four-year high.

The closely watched Markit/Cips purchasing managers’ index, where a reading above 50 indicates growth, showed that activity in the services sector rose to a ten-month peak of 56, up from 54 in December.

The strength of the US employment figures took many economists by surprise. Howard Wheeldon of BGC Capital Partners said: “Those of us that cautioned to expect a probable slowing down in the pace of jobs recovery last month have been forced to eat our words.”

The Centre for Economics and Business Research (CEBR) in London said the figures provided support for its prediction that the US will be the “star economic performer of the western world in 2012.”