Wealth Manager - Essential news for investment professionals

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

US jobs shock calls tapering into question

US jobs shock calls tapering into question

Far fewer jobs than expected were created in the US last month, although unemployment has continued to slide as more people leave the working population.

Despite a consensus forecast of 197,000, US non-farm payrolls rose by only 74,000 in December, a significant decline from November’s figure of 241,000.

At 2pm the FTSE 100 was up 65 points at 6,756 as markets waited on the opening bell in Wall Street.

Paul Ashworth, chief US economist at Capital Economics, attributed the ‘unexpectedly weak’ number to the ‘unseasonably severe winter weather last month’.

He highlighted the US household survey, which revealed that 273,000 people had reported being unable to work because of the weather in December, and a drop of 16,000 in construction payrolls as indications of the winter’s effect.

‘All things considered, the well below consensus gain in payrolls will inevitably lead to speculation that the Fed will leave its monthly asset purchases unchanged at $75 billion per month at the upcoming meeting in late January,’ Ashworth noted.

However, Ashworth maintained his belief that the Fed, led by new president Janet Yellen (pictured), would still cut this by $10 billion given that unemployment had fallen to 6.7% from 7% thanks primarily to 347,000 people exiting the labour force.

‘At 6.7% the unemployment rate is closing in on the 6.5% threshold that was originally intended to signal that the Fed would at least begin to consider raising the Fed funds rate,’ Ashworth concluded.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Sarasin’s Boucher: why I like salmon with chocolate

Sarasin’s Boucher: why I like salmon with chocolate

Henry Boucher, manager of the £129 million Sarasin Food & Agriculture Opportunities fund, explains why he is gobbling up salmon and chocolate stocks.

Play Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Libby Ashby and leading wealth managers analyse what the Alibaba IPO hype means for Chinese equities, slowing growth of the UK economy and whether there’s anything left to play for in the European sovereign bond market.

Play Tesco, Japan and the rise of the central banker

Tesco, Japan and the rise of the central banker

 Libby Ashby and leading wealth managers scrutinise the food retail sector, Japan’s consumption tax hike and political risk in the markets.

Your Business: Cover Star Club

Veteran banker boosts Sanlam’s stockbroking team

Veteran banker boosts Sanlam’s stockbroking team

A veteran private banker has been recruited by Sanlam Private Investments to strengthen its advisory stockbroking team.

Wealth Manager on Twitter