US jobs figure sparks hope, stocks up
US employment grew modestly last month and gains in the prior two months were bigger than initially reported, supporting views the economy's sluggish recovery was on track despite a surprise contraction in output in the final three months of 2012.
Other data yesterday also suggested the recovery was intact, with factory activity hitting a nine-month high in January on strong new order growth. Consumer confidence perked.
Employers added 157,000 jobs to their payrolls last month and there were 127,000 more jobs created in November and December than previously reported. The closely watched report showed an increase in hourly earnings and solid gains in construction and retail employment. The unemployment rate, however, edged up 0.1 percentage point to 7.9 per cent.
"This is actually a really good number given the net upward revision," said Terry Sheehan, an economic analyst at Stone & McCarthy Research Associates in the US.
The Institute for Supply Management said its index of national factory activity rose to 53.1 last month, the highest level since April, from 50.2 in December. That offered hope manufacturing will continue to support the economy.
US stocks rose on the fairly upbeat reports and the dollar advanced against the yen. US Treasury debt prices were trading higher as the rise in the unemployment rate suggested the Federal Reserve would maintain its easy monetary policy stance.
The Dow Jones Industrial Average rose 140.39 points to briefly climb above 14,000 for the first time since 2007 and the S&P 500 Index jumped 0.9 per cent. The 10-year Treasury yield fell two basis points to 1.96 percent.
Coming on the heels of data on Wednesday showing a surprise contraction in gross domestic product in the fourth quarter, the reports should ease any worries the economy was at risk of recession, even though the unemployment rate ticked up.
GDP contracted at a 0.1 per cent annual rate in the fourth quarter, largely because of a sharp slowdown in the pace of inventory accumulation and a plunge in defence spending.
Reuters and Bloomberg