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While you were sleeping: US jobs data good enough

While you were sleeping: US jobs data good enough

Sept 6 (BusinessDesk) – Wall Street advanced as the latest jobs data confirmed the view that the US economic recovery is gathering traction.

In late afternoon trading in New York, the Dow Jones Industrial Average advanced 0.16 percent, the Standard & Poor's 500 Index increased 0.22 percent, while the Nasdaq Composite Index added 0.34 percent.

American companies added 176,000 jobs in August, while jobless claims dropped by 9,000 to 323,000 in the week ended August 31, from a revised 332,000.

"[It's] enough to reinforce expectations that the Fed will begin to taper its asset purchases," Paul Ashworth, an economist at Capital Economics in Toronto, told Reuters.

Investors will also scrutinise tomorrow's monthly government payrolls data, considered the final key clue as to whether the US Federal Reserve will announce a decision to begin tapering its bond-buying program later this month.

Payrolls probably climbed by 180,000 in August, following July’s 162,000 gain, according to a Bloomberg News survey median. The jobless rate probably held at 7.4 percent.

"Most people are looking at Friday’s jobs number as the determining factor whether or not the Fed will start tapering in September,” Steven Bulko, the New York-based chief investment officer of Lombard Odier’s US$1.2 billion long/short 1798 Fundamental Strategies Fund, told Bloomberg News.

Other reports showed strength too. The Institute for Supply Management said its services index rose to 58.6 last month, the highest level since December 2005, up from 56 in July.

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New orders for manufactured goods slid 2.4 percent, according to the Commerce Department. The decline was smaller than expected.

In Europe, the Stoxx 600 Index rose 0.7 percent from the previous close. Germany’s DAX climbed 0.5 percent, while France’s CAC 40 gained 0.7 percent, and the UK's FTSE 100 Index rose 0.9 percent.

The euro weakened against the US dollar, declining 0.7 percent, after European Central Bank President Mario Draghi suggested the central bank is ready to cut interest rates. Even so, the ECB kept its key rate unchanged following today's meeting.

"Looking ahead to the remainder of the year and to 2014, in line with our baseline scenario, output is expected to recover at a slow pace, in particular owing to a gradual improvement in domestic demand supported by the accommodative monetary policy stance," Draghi said in remarks following the meeting. "The risks surrounding the economic outlook for the euro area continue to be on the downside."

(BusinessDesk)

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