News Column

Surge in US jobs pushes Dow Jones past 17,000 barrier

July 4, 2014

Phillip Inman Jessica Glenza New York

The Dow Jones index has soared through the 17,000 barrier to a record high after US data showed a bigger-than-expected surge in job creation last month.

Official figures showed an extra 288,000 jobs in June and the rate of unemployment in the US dropped to 6.1%, as businesses recovered from freezing weather in early spring.

Stock markets in London, Paris and Frankfurt all rallied on the back of the job gains, which the US labour department said were widespread. The Dow was up 74 points yesterday afternoon and up some 1,000 points since October last year.

Wall Street analysts had expected about 215,000 jobs to be created in June, and an unchanged unemployment rate of 6.3%, or 9.8 million people out of work. That number fell to 9.5 million. Much of the pessimism ahead of the report was based on figures showing the economy had shrunk by 2.9% in the first three months of the year. A crippling freeze which affected most of the country brought much activity in the constructions and services sector to a halt, though the effects have proved largely temporary.

The news will cheer the White House, which shows businesses undeterred by higher costs from the expansion of healthcare and plans to make more workers eligible for time-and-a-half pay when they work overtime.

President Obama has made several speeches in recent months calling for workers to enjoy a fair slice of the recovery and attacking banks for maintaining large bonus pots for risking trading activities.

One analyst described the jobs report as a "blockbuster" that showed the US economy was roaring back to life.

Marcus Bullus, trading director of MB Capital, said: "Someone attached the jump leads to the US jobs market in June.

"The markets will go into the long weekend on a buzz, while strong upward revisions in April and May will add to the feel-good factor," he said.

The broad-based recovery saw growth in professional and business services, retail and food services. The number of long-term unemployed, those without work for 27 weeks or more, also declined by 293,000 in June, to 3.1 million. In May, these workers accounted for a little more than one-third of the total number of unemployed. That number dropped to 32.8% of the total unemployed.

The labour market participation rate, the number of people of working age who are working or seeking employment, held steady at 62.8%.

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Source: Guardian (UK)

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