US Jobs Report Gives FTSE a Jolt

FRIDAY MARKET UPDATE: The latest jobs report shows the US unemployment rate fell to a four-year low

Alanna Petroff 7 December, 2012 | 5:26PM
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A better-than-expected US jobs report briefly jolted the markets out of their sideways trading stupor, but then investors very quickly calmed down and the markets pared their gains.

The latest jobs report shows the US unemployment rate fell to a four-year low of 7.7% in November.

"November's [US] employment report is something of a mixed bag but, on balance, it's a positive," said Paul Ashworth, chief US economist at Capital Economics. "Non-farm payroll employment increased by a better-than-expected 146,000 last month, well above the consensus forecast at 85,000."

While the US Bureau of Labor Statistics pointed out that superstorm Sandy had no substantial impact on the numbers, this just means that "people sent in the data like they were supposed to, so the [statisticians] could do their work on the data and do their analysis," said Morningstar's director of economic research, Robert Johnson. "It doesn't mean that the storm had zero impact on the jobs market. I still believe, as good as the report was ... if the weather had been better, we would have had even better [jobs numbers]."

While November's numbers may have looked good, the employment gains that were made in September and October were revised down by a total of 49,000. This kept any market euphoria in check. 

"The downward revision of [earlier] payroll figures counterbalanced the headline number," said David Madden, a market analyst at IG.

"Stocks moved higher after the report but with the FTSE and DAX at six-week and five-year highs respectively, traders are wondering how long this bull run will last," said Madden. "It would appear that the numbers were good but not good enough to aggressively buy, and there is a feeling that you don’t want to be long at these levels." 

The FTSE 100 index edged up by 13 points, or 0.2%, to close the week at 5,914. The FTSE 250 index pushed 38 points higher, or 0.3%, to close at 12,188.

Market Performance: December 3 - 7

FTSE 100 Index: +0.81%
FTSE 250 Index: +1.27%
FTSE All Share: +0.89%
FTSE Small Cap: +1.56%
FTSE AIM 100: -1.16%
FTSE Fledgling: +0.91%

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About Author

Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.