Strong job creation lifts US economy

Strong job creation lifts US economy
Copyright The Financial Times Limited 2007
Published: June 1 2007 15:30 | Last updated: June 1 2007 21:40
The US economy appeared to be pulling out of a stall on Friday as figures showing surprisingly strong job creation and factory expansion pushed stocks into record territory.

With inflation also slightly softer, there is little immediate pressure on the Federal Reserve to change interests rates in either direction.

Alan Ruskin, a currency strategist at RBS, said the figures “should send another dagger in the heart” of those investors betting that the Fed would cut rates.

Employers added 157,000 staff to their payrolls last month following an increase of 80,000 the previous month, while the unemployment rate held steady, near to five-year lows at 4.5 per cent, the government said.

Surprisingly, there was no net loss of construction jobs reported, in spite of the severe weakness in the housing market.

The strong demand for new staff was seen as a sign that the economy is snapping back from its anaemic performance in the first quarter of this year and sparked a rally in the dollar.

Labour income also grew at a healthy rate, offering support for consumer spending in spite of the higher gasoline price drag.

Bond prices fell as the yield on the benchmark 10-year treasury note rose 5.3 basis points to 4.945 per cent.

The dollar rose to its highest level against the yen in nearly four months and to a seven-week high against the euro. It was 0.1 per cent higher against the euro at $1.3430 and 0.3 per cent up against the yen at Y122.09.

Reporting by Eoin Callan and Krishna Guha in Washington, Neil Dennis in London and Richard Beales in New York