LONDON (AP) — Weak U.S. jobs figures shored up stock markets Tuesday but weighed on the dollar, which fell to its lowest level against the euro this year, as investors concluded that the Federal Reserve would not be reducing its monetary stimulus this year.
The Labor Department reported that 148,000 jobs were created in September, below the consensus in the markets for around 180,000. Following revisions to back data, it means that the U.S. economy added an average of 143,000 jobs a month from July through September, down from 182,000 from April through June.
Though the unemployment rate, which is based on a separate survey, fell to 7.2 percent from 7.3 percent, the labor market report suggests the U.S. economy was slowing even before the U.S. government was partially shut down. The September figures were delayed from their traditional release time of the first Friday of the month because of the shutdown.
Following the figures, already solid stock markets turned even higher while the dollar's weakness was sustained as investors think it's now unlikely that the Fed will start reducing its $85 billion worth of monthly asset purchases this year. Until the budget stalemate in Washington, many investors had thought the Fed would already be "tapering" the stimulus.
"With the budget dispute more than likely trimming fourth-quarter growth, Federal Reserve policymakers are expected to wait until March to begin reducing stimulus," said Max Cohen, a trader at Spreadex. "Especially now considering the weak non-farm data."
In Europe, the FTSE 100 index of leading British shares was up 0.5 percent at 6,688 while Germany's DAX rose 0.7 percent to 8,927. The CAC-40 in France was 0.6 percent higher at 4,301.
Wall Street was poised for a solid opening, with both Dow futures and the broader S&P 500 futures up 0.3 percent.
The dollar was under pressure on the prospect of a longer period of stimulus, which effectively leads to the creation of more dollars. The dollar was down 0.1 percent at 98.06 while the euro was 0.4 percent higher at $1.3727. Europe's single currency earlier hit $1.3748, its highest level this year.
As well as monitoring the U.S. data flow, investors have a raft of U.S. earnings statements to digest this week. Around 30 percent of the companies listed on the S&P are due to release third-quarter numbers this week.
Earlier in Asia, the mood was subdued, too. Japan's Nikkei 225 stock average closed up 0.1 percent at 14,713.25 and Australia's S&P/ASX 200 added 0.4 percent to 5,373.10. Seoul's Kospi gained 0.2 percent to 2,056.12. Hong Kong's Hang Seng shed 0.5 percent to 23,315.99 and China's Shanghai Composite Index was off 0.8 percent at 2,210.65.
In the oil markets, a barrel of benchmark New York crude was down 32 cents at $99.37. Oil closed below $100 a barrel Monday for the first time since early July as U.S. supplies keep rising and the risks of disruption to Middle East shipments subside.
US Employers Add 148K jobs; Rate Falls To 7.2%
WASHINGTON (AP) — The U.S. economy added just 148,000 jobs in September, suggesting that employers held back on hiring before a 16-day partial government shutdown began Oct. 1.
Still, hiring last month was enough to lower the unemployment rate. The Labor Department said Tuesday that the rate fell to 7.2 percent from 7.3 percent in August. Unemployment remains historically high but is near a five-year low and is down from 7.9 percent at the start of 2013.
The tepid job growth makes it more likely that the Federal Reserve will maintain its level of bond purchases for the rest of this year. The bond purchases are intended to lower long-term interest rates and boost borrowing and spending.
The release of the September jobs report had been delayed 2½ weeks by the shutdown, which likely further slowed economic growth and hiring. Temporary layoffs of federal workers and government contractors will probably depress October's job gain. That means a clear view of the job market may not emerge until the November jobs report is issued in December.
The report "reinforces the impression that the labor market was losing a little momentum heading in to the shutdown," said Josh Feinman, global chief economist at Deutsche Asset and Wealth Management. "The labor market is continuing to create jobs. ...It's just frustratingly slow."
The economy has added an average of 143,000 jobs a month from July through September, weaker than the 182,000 average gain from April through June.
Stock futures rose after the report was released at 8:30 a.m. Eastern time, and in early trading the Dow Jones industrial average was up about 40 points.
A tight job market has discouraged many Americans from looking for work. The percentage of Americans working or looking for work remained at a 35-year low last month
The September jobs report showed that some higher-paying industries added jobs at a healthy pace. Construction companies, for example, added 20,000.
Transportation and warehousing gained 23,400 jobs, governments 22,000.
And average hourly pay ticked up 3 cents to $24.09. In the past year, hourly pay has risen 2.1 percent, ahead of the 1.5 percent inflation rate.
The department revised its estimates of job growth in July and August to show a slight net gain of 9,000. It said employers added 193,000 jobs in August, more than the 169,000 previously estimated. But it said just 89,000 were added in July, the fewest in more than a year and below the earlier estimated 104,000.
The deceleration in job growth was a key reason the Fed decided in September to hold off on slowing its $85-billion-a-month in bond purchases. Many economists think the lack of clean data will lead the Fed to put off any decision on the bond purchases until 2014.
"It reinforces their hesitancy," Feinman said of the September jobs report. "It's more validation for their hesitancy to taper in September."
Many economists say the shutdown cut $25 billion out of the economy and slowed growth to about a 2 percent annual rate in the October-December quarter. That's down from estimates before the shutdown that the economy would expand at a 2.5 percent annual rate.
But growth will likely be a bit higher in the first three months of next year, as consumers and businesses make purchases and investments that were delayed during the shutdown.