US payroll jump.

3rd February 2012

Ian Copelin, Investment Director, my wealth, comments “US employment climbed more than forecast in January (payrolls increased 243,000 versus market expectations of a 140,000 increase) and the US jobless rate unexpectedly fell to 8.3%, the lowest in three years.

Factory workers put in an average 41.9 hours of work each week, the most since January 1998, while overtime hours climbed to the highest since March 2007.  Manufacturing payrolls increased by 50,000 in January, the most in a year, while construction companies added 21,000 workers and the Government decreased payrolls by 14,000.  The underemployment rate (which includes part-time workers who would prefer a full-time position and people who want work but have given up looking) decreased to 15.1% from 15.2%.

This data clearly illustrates that the US recovery is stronger than many think and that US companies are gaining confidence that the US economy will weather any uncertainty caused by the Eurozone debt crisis.

The release of the data at 1.30pm sent the FTSE-100 sharply higher – it is currently up 74 points (1.28%) at 5,870, having been up only 24 points (0.41%) just before 1.30pm.  US futures indicate a firmer start for the S&P 500 and Dow Jones – the S&P 500 is poised for its fifth week of gains (its longest streak in a year), while the Dow is just 105 points (0.82%) away from its 2011 peak of 12,810.54 set on 29 April.

Elsewhere, rumours suggest that European officials and Greek creditors will shortly agree to a loss of more than 70% for bondholders in a voluntary debt exchange involving Greek debt with a face value of about €200 billion.  This should allow Greece to access the next tranche of its international bailout package – Greece faces a €14.5 billion bond payment on 20 March 2012 and general elections as soon as April.”