U.S. unemployment rate dips to 9.1 percent
Source: Herald Staff And Wire Reports
The U.S. unemployment rate dipped to 9.1 percent in July as employers added 117,000 jobs, according to a better-than-expected government report this morning that could calm jittery investors who have been in sell mode for weeks.
Wall Street is coming off its worst single-day points decline since the 2008 financial crisis brought on by the collapse of investment bank Lehman Brothers. Investors are worried about slow economic growth and a possible "double-dip" recession.
The Dow Jones industrial average dropped 513 points yesterday, sliding into "correction" territory with the index off 10 percent since its high in the spring.
This morning, stock futures rallied by more than 1 percent after the jobs report was released at 8:30 a.m.
And in the first minutes of trading, the Dow jumped by more than 150 points.
Analysts had been expecting payrolls to increase by 85,000 and the jobless rate to remain at 9.2 percent.
"The favorable jobs report should help the market regain the confidence it deserves," said Peter Andersen, senior portfolio manager at Congress Asset Management in Boston. "Since January of this year I’ve been saying that U.S. companies have excellent balance sheets, reasonable valuations and excellent earnings results. In spite of the negative economic factors out there, my analysis still leads to an optimistic outlook for U.S. stocks."
The Labor Department also revised the May figures to 53,000 jobs added, up from the previous estimate of 25,000, and the June report to 46,000 added, up from 18,000.
Still, the rate of hiring across the nation was enough to lower the jobless rate but not nearly enough to rapidly reduce unemployment. The economy needs twice as many net jobs per month to create such a change.
"While I do not think this sounds the all-clear signal, it does quell some of the conversation that the U.S. is falling back into a recession," Tom Porcelli, chief U.S. economist at RBC Capital Markets, told Reuters. "This report pulls us back from the ledge a little bit."
Stocks in other global markets tumbled earlier today amid growing panic about the debts of big euro-zone countries like Italy and Spain along with worries the U.S. may be heading back into recession.
London’s FTSE 100 fell 2.1 percent, Germany’s DAX dropped 1.8 percent and France’s CAC-40 shed 0.3 percent. Earlier, Japan’s Nikkei slid 3.7 percent, Hong Kong’s Hang Seng plummeted 4.3 percent and China’s Shanghai Composite Index lost 2.2 percent.
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