US job report pushes US stocks higher

US employers added 157,000 jobs in January and hiring was stronger over past two years than previously thought.

US jobs
Construction companies added 28,000 jobs in January and nearly 100,000 in the past four months [Reuters]

US data have showed employment has grown modestly in January and factory activity has touched a nine-month high.

The Friday reports, which helped propel US stock markets to their highest levels in more than five years, contrasted markedly with a government report earlier in the week that said the economy shrank unexpectedly in the final months of 2012.

“It is clear that the economy has a forward momentum. Most pistons in the economic engine are firing, pointing to sustained economic growth,” said Sung Won Sohn, an economics professor at California State University Channel Islands.

Payrolls rose by 157,000 in January and revisions showed 127,000 more jobs created in November and December than previously reported, the Labor department said on Friday.

Separately, the Institute for Supply Management said its index of national factory activity rose to 53.1 last month, the
highest level since April, from 50.2 in December.

The economic growth picture was also brightened by reports showing General Motors Co and Ford Motor Co – two of the nation’s big automaker – scored better-than-expected sales in January.

Friday data also suggested that the surprise contraction in economic activity in the last three months of 2012 was largely a fluke, not a trend.

“There’s a lot of money looking for a home and people are finally deciding the bond market is done and moving money into equities,” said Edward Simmons, managing director and partner at HighTower in Portland, Maine.

Friday’s jobs report shows the US economy is improving, but Congress needs to act on policies that promote growth and avoid deep cuts slated to take effect next month, Alan Krueger, a White House economist, said.

“The administration continues to urge Congress to move toward a sustainable federal budget in a responsible way that balances revenue and spending, and replaces the sequester (defence spending cuts, while making critical investments in the economy that promote growth and job creation,” Krueger said in a blog post.

Investors cheer

Investors cheered the fairly upbeat reports and bought US stocks, lifting them to a five-year high. The dollar rallied against the Japanese yen, while US Treasury debt prices seesawed.

The Dow Jones industrial average was up 149 points, or 1.08 percent. The Standard & Poor’s 500 Index was up 15.06 points, or 1.01 percent.

The Nasdaq Composite Index was up 37 points, or 1.18 percent.

The gains are on the fastest start to the year for equities in 16 years.

Major world stockmarkets rose to their highest levels in nearly two years on Friday helped by manufacturing and employment data indicating the global economic recovery is on track.

The euro rose to its highest level against the US dollar since mid-November 2011 after data showed euro zone factories had their best month in January in nearly a year.

The yen fell to a two and a half year low against the dollar and a 33-month trough versus the euro, extending its recent weakness on bets the Bank of Japan will ease monetary policy further.

European shares inched up on Friday, as investors took advantage of the past two sessions’ losses to snap up equities more cheaply, reassured by the run of solid data from China, Europe and the United States.

Source: News Agencies