U.S. stocks rise as unemployment plummets

Birmingham Star Friday 3rd February, 2012

243,000 new jobs were added to the U.S. economy in January, pushing unemployment down to 8.3% from 8.5%.

Market analysts were stunned by the improvement in employment, a major bellwether for the U.S. economy.

Wall Street rallied on the news as many commented it may be a turning point after the doom and gloom that has prevailed over world markets since the 2008 global financial crisis.

In a separate report, a U.S. trade group, the Institute for Supply Management, said its survey of American service companies shows they are growing at the fastest pace in almost a year, with increased hiring and sales.

"This is a continuation of a grinding but measurable improvement in the U.S. data," Stephen Wood, chief market strategist at Russell Investments in New York told Reuters Thomson.

"To the extent the market has the time or luxury to focus on the U.S. economy, this is a modestly positive environment for U.S. equities."

At the close of trading Friday the Dow Jones Industrial Average was up 156.67 points or 1.23% at 12,862.08.

The Nasdaq Composite was ahead 45.98 points or 1.61% at 2,905.66.

The Standard and Poor's 500 was up 19.35 points or 1.46% at 1,344.89.

Technology stocks continued to outpace the broader market in the wake of the forthcoming Facebook IPO. The tech-laden Nasdaq Composite on Friday hit its highest level in eleven years.

The U.S. dollar was mixed while bond prices fell.

Around the New York close Friday the euro was changing hands at 1.3146.

The Japanese yen fell to 76.55.

The British pound pushed higher to 1.5815. The Swiss franc was a fraction weaker at 0.9182.

The Australian dollar rallied to 1.0775 whiles it counterpart, the New Zealand dollar, shot up to 0.8359.

The Canadian dollar was sharply higher at 0.9934.

In its closely watched monthly report, the U.S. government said Friday that 243,000 jobs were added in January, a month after the world's largest economy recorded 200,000 new jobs. The January figure, the biggest addition in nine months, substantially exceeded the early estimates of economists. Analysts said the report signaled that the sluggish U.S. economic recovery might be advancing at a faster pace than first thought.

U.S. President Barack Obama called the employment report evidence that the "recovery is speeding up" from the depths of the country's recession of a few years ago. He called on Congress to quickly extend a cut in payroll taxes affecting 160 million workers that is set to expire at the end of February, as well as benefits for unemployed workers, so the economy is not slowed.

The jobs report and the jobless rate have perhaps become the two most important barometers of the sluggishly advancing American economy. Central bank chief Ben Bernanke said this week that the recovery from the nation's 2007 to 2009 recession, its worst economic downturn in seven decades, has been been "frustratingly slow" and is likely to advance by no more than 2.7 percent this year.

But the January jobs report - and the unexpected drop in the jobless rate from December's 8.5 percent figure - could boost the re-election prospects for Obama, a Democrat seeking a second four-year term in the national election next November. The two leading contenders seeking the Republican nomination to oppose him - one-time venture capitalist Mitt Romney and former House Speaker Newt Gingrich - have regularly unleashed verbal assaults on the president's handling of the economy, calling for less government regulation of American corporations as a way to boost the country's economic fortunes.

Analysts say the additional number of U.S. jobs the last two months are a sign the American economy is growing at a time when some other economies across the globe, such as in Europe, have virtually stalled, or slowed, as is the case in China and India.

The U.S. jobless rate has dropped for five straight months, the first time that has occurred in 18 years. The government said the boost in hiring occurred across the economy, with manufacturers adding 50,000 jobs and the leisure and hospitality industry another 44,000. Professional and business service companies hired 70,000 more workers, the most in 10 months, with many of them filling higher-paying positions.

Even with the additional jobs added to the labor market in January, the U.S. has fallen far short of replacing the 8.7 million jobs lost in the recession. Nearly 13 million workers remain unemployed, while millions more are under-employed, working part-time jobs because they cannot find full-time work or at jobs beneath their skill level.

The state of the U.S. economy has become the prime issue in the emerging presidential campaign, with many voters saying they disapprove of the way that Mr. Obama has overseen the recovery. Even with the falling jobless rate, he is likely to face voters with the highest national unemployment figure of any U.S. president since the end of World War II.

Mr. Obama has said that without the still-controversial economic boost the government provided some American corporations during the worst days of the recession, the national economy would be in worse shape. The country's housing market has been particularly troubled, with millions of unemployed homeowners losing their houses to bank foreclosures when they could no longer make their monthly loan payments.