According to the latest Labor Department statistics the US economy added 257,000 jobs in January, the 11th month in a row which has seen more than 200,000 positions created. The body also revised its figures upwards for the previous two months by an additional 147,000 jobs. While the pace of growth dropped in January an average of 336,000 jobs were created per month over the past quarter, up from 197,000 a year ago. However, the unemployment rate was marginally higher at 5.7%, up from 5.6%, as the number of people looking for work rose. Employment growth is strong and this is likely to have consequences for the Fed.
Back home, the UK’s trade deficit was 2.9 billion pounds in December, taking the shortfall for 2014 as a whole to 34.8 billion pounds. According to figures from the Office for National statistics, this was the largest gap since 2010. Whilst December’s trade data are not as bad as they first appear, the strong pound and weak demand from the eurozone are likely to prevent a material improvement in the external position in 2015.
The gold price fell £20 an ounce following the release of the strong jobs data from the US and a strengthening dollar. The data revealed strong wage growth which in turn, may prompt the Fed to raise interest rates earlier than previously thought possibly at the June meeting. Gold has fallen £40 per ounce this week after a strong start to 2015.
Greece was the word on Wall Street Friday afternoon, stealing focus from a blowout jobs report out of the U.S. in the morning.
Stocks tumbled into the red during the afternoon session after Greece’s new government showed no signs of relenting in its discussions with the European Central Bank on reforms to its bailout program.
“We will not accept any deal which is not related to a new program,” an unnamed official told Reuters.
Ratings agency Standard & Poor’s downgraded Greece’s debt rating to B- from B, arguing that “liquidity constraints have narrowed the timeframe during which Greece’s new government can reach an agreement.”
The S&P 500 slid 0.34% and the Dow Jones Industrial Average was down 0.34%.