US non-farm payrolls: Dollar dives against pound and the euro after jobs figures disappoint (GBPUSD)
The US created just 148,000 jobs last month, way below expectations of 190,000, official figures have shown.
The closely-watched non-farm payroll figure came in far lower than the 252,000 jobs created in November, taking economists by surprise after encouraging private sector jobs numbers.
Meanwhile, unemployment stuck at 4.1 per cent, its lowest since December 2000, while earnings rose by 0.3 per cent.
The news caused the pound to climb 0.2 per cent against the dollar, to $1.3574, while the euro nudged into positive territory against the dollar, rising from a low of $1.2043 to hit $1.2069.
Read more: US job openings massively undershot expectations last month
But Kully Samra, UK managing director at Charles Schwab, suggested the figure may be a blip.
“Over the year average hourly earnings have risen by 2.5 per cent. In addition, we have seen the economy grow quarter on quarter, manufacturing and services indices rise and other factors such as business confidence and housing are also picking up,” he said
“The US has benefited from a strengthening global economy, with Europe, Japan and other developing nations growing simultaneously for the first time in a decade.
“However, this year global central banks are likely to gradually curtail easy monetary policies, and although financial conditions remain easy-to-stable for now, even a modest pace of tightening could lead to conditions beginning to worsen in 2019 or beyond.”
He suggested it was unlikely the figures will put the Federal Reserve off its mission to raise interest rates, after its latest hike in December.
“There doesn’t appear to be any waning in the Fed’s desire to continue normalising policy, as evidenced by the rate hike in December. However, with Jerome Powell taking over the Fed chair position in 2018, and several new members set to be appointed, uncertainty is elevated. Judging by the comments from Powell during his confirmation hearings, continuity and transparency are priorities, but if inflation should flare up, or growth start to lag, the Fed may be challenged early in the new regime.”
Read more: The US added 228,000 new jobs in November ahead of crucial Fed meeting