Job growth was stronger than expected in the U.S. in June showing the economy on solid ground and keeping the Federal Reserve on track to scale back its massive monetary stimulus later this year. Employers added a whopping 195,000 new jobs to their payrolls last month; the Labour department said on Friday, the unemployment rate stood at 7.6 percent as more people entered the work force. The headline figure was better than the 160,000 forecast by economists, while the numbers for the two previous months were revised upwards.
Bern Bernanke the chairman of US Federal Reserve had sent the markets tumbling when he hinted that the central bank’s $ 85bn a month bond buying programme might ease slightly by the end of the year if the economy continued to strengthen. The jobs figures have further strengthened the Federal Reserve to turn off the money taps that have helped support global markets for months.
US stock prices jumped as markets opened, while the dollar strengthened. Prices of U.S. government bonds fell as traders braced for a slowing in the bond purchases the Fed has been making the bond purchases to keep the borrowing costs low. The strong growth in employment has prompted the Federal Reserve to start to taper back on its quantitative easing in the near future, opined Kathy Bostjancic director of macroeconomic analysis at the conference board. After an early burst of stocks when the figures were released, stock markets fell, with the FTSE 100 closing down 0.72 percent at 6375.5, having risen to 6,498. In the U.S., Wall Street was up by just 16 points, or 0.1 percent, by the time London closed. The dollar rose to a three year high against major currencies.
Alan Krueger, chairman of the White house council of economic advisors, said “ In the four years since the recession has ended in July 2009, the economy has added 5.3 million jobs, thanks to the American people and policies like the Recovery Act, which has helped to end the recession and put us on the path to recovery. With recovery gaining traction, now is not the time for Washington to impose self-inflicted wounds on the economy.”
The U.S. Bureau of Labor Statistics reported leisure and hospitality added 75,000 jobs in June. Monthly job growth in this industry has averaged 55,000 in 2013, almost twice the media gain of 30,000 per month in 2012. Employment in professional and business sector rose to 53,000 in June. Jobs in other industries such as mining, logging, construction, transportation, manufacturing and warehousing showed remained static. ADP, the payroll processor, said the private sector had added 188,000 jobs from May to June. Goods producing employment rose by 27,000 jobs in June, the largest increase in four months. Construction jobs payrolls also increased by 21,000 in June and manufacturers added 1,000 jobs after a two month decline.