Fears of a US slowdown after fewer than 100,000 jobs created

| September 8, 2012 | 0 Comments

By
Hugo Duncan

15:50 EST, 7 September 2012


|

02:47 EST, 8 September 2012

Fears of a slowdown in the world’s biggest economy intensified yesterday after fewer than 100,000 jobs were created in the US.

Official figures showed so-called ‘non-farm payrolls’ – the number of Americans in work – rose by just 96,000 in August.

That was well below the 125,000 expected and the average of 139,000 a month this year and 153,000 a month last year. It was a setback to Barack Obama’s hopes of re-election and piled pressure on the Federal Reserve to unleash a third round of quantitative easing – dubbed QE3 – to bolster growth.

Barack Obama's economic headache

Paul Ashworth, chief US economist at
Capital Economics, said: ‘The modest 96,000 increase in non-farm
payrolls in August only increases the probability that the Fed will
launch QE3 next week and it won’t help President Obama’s re-election
chances either.’

The
European Central Bank unveiled details of an ambitious bond-buying
programme on Thursday as it stepped up its fight to save the euro.

The
euro rose again yesterday as investors welcomed the plan. The Spanish
ten-year bond yield, which was above the 7 per cent ‘tipping point’ only
months ago, fell below 5.8 per cent.

But
attention will now switch to next week’s Fed meeting and its chairman
Ben Bernanke, who last week said the jobs crisis in the US was a ‘grave
concern’.

Unemployment
fell to 8.1 per cent in August from 8.3 per cent in June but only
because of increasing numbers of jobless citizens giving up looking for
work. The percentage of Americans who either have a job or are looking
for a job is now just 63.5 per cent – the lowest since 1981.

Unemployment
has been above 8pc for more than three years – the longest stretch
since the Great Depression of the 1930s. Kathleen Brooks, research
director at Forex.com, said: ‘The Fed now comes into sharp focus. After
that payrolls report the markets are pricing in a 75 per cent
probability of more QE next week.’

Filed Under: finance news

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