Slow job growth hurts dollar

SLOWER jobs growth by the US economy has put added pressure on the struggling dollar which took a further battering after the payroll figures were released.

For the fourth month in a row jobs were created by the world’s biggest economy, but at a far slower pace than economists had anticipated.

It takes 150,000 new jobs per month to keep unemployment from growing. That was the figure anticipated by the markets, but instead the economy delivered just a third of that at 57,000 new jobs.

Non-farm payrolls rose by 57,000 last month, the Labour Department said, just one third the 150,000 figure expected. The unemployment rate fell to 5.9% in November from 6.0% in October.

What is worrying for analysts and the markets is that the figure marked a sharp slowdown from the revised 137,000 jobs created in October and the 125,000 in September.

Job creation was affected by a two-month old grocers’ strike in California, which the Labour Department said cost around 25,000 jobs.

Following the disappointing jobs figures the dollar dropped sharply as the euro rose to $1.2120 from $1.2085 with sterling hitting $1.7245 from $1.7210.

In effect the US is continuing to create far fewer jobs than the growing labour market requires, despite signs that the economy is improving.

Sceptics of the recovery suggest the economy is achieving growth through higher productivity, and is still recovering from the over-expansion it embarked on during the boom years.

The fear is that it will take some time, how much time no one is quite sure, for the US to start creating real jobs.

Until that happens the majority view is that the dollar will remain under pressure, and as a result of that, the euro could continue to rise for at least the next six months.

An exchange rate of $1.25 to $1.30 has not been ruled out in the coming months.

Failure earlier in the week by the dollar to capitalise on good economic figures begged the question about the fillip good jobs figures was capable of injecting into the struggling dollar.