Dow Jones index soars to record high after US data shows job creation surge

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The Dow Jones index has soared through the 17,000 barrier to a record high after US data showed a bigger-than-expected surge in job creation last month.

Official figures showed an extra 288,000 jobs in June and the rate of unemployment in the US dropped to 6.1%, as businesses recovered from freezing weather in early spring.

Stock markets in London, Paris and Frankfurt all rallied on the back of the job gains, which the US labour department said were widespread.

The Dow closed at 17,068.26 on a shortened holiday session on Thursday, up 74 points and up 1,000 points since October last year.

Wall Street analysts had expected about 215,000 jobs to be created in June, and an unchanged unemployment rate of 6.3%, or 9.8 million people out of work. That number fell to 9.5 million.

Much of the pessimism ahead of the jobs report was based on figures showing the economy had shrunk by 2.9% in the first three months of the year.

A crippling freeze which affected most of the country brought much activity in the construction and services sector to a halt, though the effects have proved largely temporary.

The news will cheer the White House, as it shows businesses undeterred by higher costs from the expansion of healthcare and plans to make more workers eligible for time-and-a-half pay when they work overtime.

Barack Obama has made several speeches in recent months calling for workers to enjoy a fair slice of the recovery and attacking banks for maintaining large bonus pots for risky trading activities.

One analyst described the jobs report as a "blockbuster" that showed the US economy was roaring back to life.

Marcus Bullus, trading director of MB Capital, said: "Someone attached the jump leads to the US jobs market in June.

"The markets will go into the long weekend on a buzz, while strong upward revisions in April and May will add to the feelgood factor."

The broad-based recovery saw growth in professional and business services, retail and food services.

The number of long-term unemployed, those without work for 27 weeks or more, also declined by 293,000 in June, to 3.1 million. In May, these workers accounted for a little more than a third of the total number of unemployed. That number dropped to 32.8% of the total unemployed.

The labour market participation rate, the number of people of working age who are working or seeking employment, held steady at 62.8%.

The department also revised April and May job numbers up. In April they rose to 304,000 from 282,000, and in May the numbers went up from 217,000 to 224,000.

Strong job figures were also recorded in the UK services industry following a surge in orders. The Markit Cips survey of the sector, which accounts for 77% of the economy, showed that a mild slowdown in growth during May and June is likely to be shortlived as orders boost activity in the second half of the year.

Powered by Guardian.co.ukThis article was written by Phillip Inman and Jessica Glenza in New York, for The Guardian on Thursday 3rd July 2014 19.27 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

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