Better than expected US employment figures fail to have a lasting impact on the markets

<p>European markets saw a fairly flat end to the trading week. Better than expected US jobs data lifted the markets for a period, however, this […]</p>

European markets saw a fairly flat end to the trading week. Better than expected US jobs data lifted the markets for a period, however, this effect was short lived and they soon returned to a tight range.

The FTSE closed up 0.1% whilst the CAC and DAX saw a slight increase of 0.3% each.

Europe produced manufacturing PMI figures earlier in the day, which came in slightly better than expected, although it did in fact show that even core regions such as Germany and France were contracting at a faster pace than the previous month. Fortunately the markets did not read too much into the figures as focused remained on the US payroll numbers.

The non-farm payroll figures from America, the last set of employment data before the US elections, rose by 171,000 last month, well above the 125,000 expected. The unemployment rate increased by 0.1% to 7.9% as expected.

Labour force participation in the US has improved in the last few months and we have seen the figures come in on or above expectations as hiring has improved. This is extremely welcome news – not just for the President in his run up to the election but for the economy, as it suggests that the US economy is still expanding. Positive employment figures in addition to a positive manufacturing PMI yesterday indicates that there is still steam in the recovery – a hugely important fact at a time when China and Europe are losing steam.

The US employment figures provided a welcome distraction from another round of poor third quarter results in Europe. Topping the loser board here in London Admiral shed over 5.3% after the car insurer reported that third quarter turnover was down over 2%.

RBS also lost over 2% as it reported a third quarter loss of 12.5p a share from an 11.3p profit in the earlier quarter. It also followed sector peer Lloyds in making further provisions for the potential fall out of the mis-selling of PPI, adding £400 million to the PPI pot. Furthermore RBS announced a £1.46 billion adjustment, reflecting the increased theoretical cost of buying back the group’s corporate debt.

After a quiet start to the week, with US markets being closed, momentum failed to pick up as the week progressed. With the US Presidential elections next week we can expect to see a bit more action.

 

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