U.S. Jobless Rate Falls, Boosts Optimism in Asia
The U.S. Labor Department announced on December 4 that jobs lost in the United States in November was a mere 11,000 – much lower than the 125,000 or so that most economists had anticipated. The reduction pared the U.S. unemployment rate to 10%, down from 10.2% in October.
U.S. stock indexes roared, with Nasdaq ending the day up 2.6%, the S&P 500 up by 1.2% and the Dow also up by 0.8%, while the greenback jumped 1.2% against a basket of six major currencies. Asian stock markets also opened higher on December 7 as the stronger dollar and lower U.S. jobless rate boosted optimism that the U.S. consumer may start spending again.
The employment data was welcomed in Asia because the U.S. remains the region’s biggest export market, particularly in China. While Asian economies have been growing more robustly than anticipated, a significant driver of that expansion is government stimulus spending, which cannot last much longer because it threatens to shred state finances.
The hope is that a recovery in U.S. employment numbers, coupled with growing domestic consumption and intra-regional trade, will put Asian economic growth on a more sustainable footing.
But analysts caution against an over-reading of the latest U.S. jobless data. Temporary workers are typically hired in November in anticipation of holiday sales in December. The real test will come in January, when employment numbers will be normalised.
Indeed, President Barack Obama has reiterated that America’s employment situation remains dire. The November data is “good news,” he says, but “I still consider one job lost one job too many . . . Good trends don’t pay the rent.”
Obama has convened a jobs summit and is preparing to send a list of ideas to the U.S. Congress for a new jobs bill designed to grow employment, including money to state and local governments to avert layoffs and cash incentives for homeowners to refit their houses with energy-saving materials.