With Friday’s better than expected jobs numbers and unemployment figures nearing three-year lows at 8.3 percent, it was a jolt of good news not only for the U.S. but also the global economy. It also represented good news for President Barack Obama’s re-election.
In addition to declining unemployment, the report also disclosed that the U.S. added 243,000 new jobs in January. This came in higher than Wall Street’s expectations of about 140,000, according to the Financial Times. It was the strongest monthly numbers since last spring.
Overall, the report had economists and investors reacting positively to it. David Sloan, economist at IFR Economics, said, “There can be no doubts over the positive nature of this report. There is only one obvious significant caveat – an unusually mild winter restricting the number of seasonal lay-offs, which are always heavy in January.”
Upon hearing the news right before the market’s open, investors immediately drove the market higher this morning. The Nasdaq reached an 11-year high and the S&P has now seen an advance to almost 7 percent year to date.
The Dow just hit the market close up 155 points.
By taking a closer look at Friday’s jobs report, it painted a positive picture across different sectors. Manufacturing added 50,000 jobs, the most in a year while professional services came in higher at 70,000–its highest number in 10 months.
The non-manufacturing ISM, which reflects activity in the service sector, exceeded expectations with its 3.8 percent rise in January to 56.8 percent. Even better was the employment sub-index; it rose by 7.6 percent to 57.4 percent.
Other positive numbers has activity in services reaching an 11-month high across the globe, according to indices from purchasing managers of leading economies. Companies are recording order increases and expressing an interest in adding staff.
While things appear to be looking up in the U.S., the weak euro zone has seen declines in activity moderating. Analysts will now wait for the business surveys to evolve into solid economic numbers this year and show that forecasts had been too negative.
Numbers Help Obama Administration
With hopes that maybe the worst is behind us economically, the Obama administration embraced Friday’s job report. Alan Krueger, chairman of the council of economic advisers said, “We need to extend the payroll tax cut and continue to provide emergency unemployment benefits through the end of this year, and…create an economy built to last.”
But the administration will need to see a trend with these positive numbers. While unemployment has declined each month since August’s 9.1 percent figure, voters still view this as the campaign’s top issue. Millions of workers remain unemployed and have stopped looking for work. Should a downward trend push things backwards, look for voters to be angered.
The Democrats will have to walk a fine line and tread carefully over the next few months when it comes to economic numbers as the Republican candidates are looking at everything with a fine-toothed comb.