US markets ended the week on a good note, as monthly non-farm payrolls numbers fell for January but showed that more Americans were looking for work and that the construction and mining industries were hiring. The Dow Jones Industrial Average added 1%, the S&P 500 tacked on 1.3% while the Nasdaq rose nearly 1.7%. The USD rose along with gold.
The US Department of Labor said there were 113,000 new jobs added in January. This followed December’s horrid 75,000 figure, far below last year’s average gain of 194,000. The fall helped bring the monthly unemployment rate down to a seasonally adjusted 6.6%, just above the 6.5% mark set by the US Federal Reserve to suppress interest rates. While the headline numbers were puny, there were 115,000 previously unemployed people who found jobs. The report also showed that manufacturers, construction firms and mines added a combined 76,000 jobs last month – the most since January 2006. These industries only tend to add employees when they are confident in a growing economy.
Payrolls data is a bellwether for the US Federal Reserve’s bond-buying programme. This week, Fed chairperson Janet Yellen testifies before Congress, and she is expected to stick to the Fed script of a gradual reduction in its bond-buying programme, now at USD65 billion a month. The programme has been a massive boon for equities, and has kept the USD in check. Its gradual withdrawal has spooked a number of Emerging Markets, who fear it may hurt liquidity.
Europe equities rose despite the US non-farm payrolls numbers as investors took pains to read between the lines. The DJ Stoxx 600 was up 0.7%, despite a fall in German industrial output for December. Berlin said output for December fell 0.6% from a month earlier, failing to meet estimates in a Bloomberg News survey.
Japan equities were sharply higher Friday on a stronger US dollar and hopes for a sustained US recovery ahead of crucial non-farm payrolls data. The Nikkei 225 rose 2.2%, taking cues from Wall Street’s best day in 2014 overnight. Exporters led gainers with Honda Motor up 2.9% while silicon wafer maker Shin-Etsu ended 3.9% higher.
