Ahead of the all important decision later in the month, the Federal Reserve’s that is (are there any other major decisions this month?) we received the all important US jobs data today. A Reuters poll expected US jobs to increase by c.164,000 during May and also predicted the jobless rate would tick down from 5% to 4.9% as well as the average hourly earnings rate rising 0.2%.
However, US jobs shocked the markets with the lowest level of job creation in 5 years, adding just 38,000 jobs during last month which is the lowest since September 2010. Numbers were certainly affected by the Verizon strike but with this estimated impact not considered there would still have been around half the amount of jobs created from the most conservative of predictions. The USD fell by almost 2% as we write vs the yen and this will surely have big implications with respect to a Fed rate hike in the near future. Despite this the unemployment rate fell to the lowest level since November 2007, partly due to people dropping out of the labour force. The weekend will now be left for markets to digest the true scale and significance of these numbers, deciding whether a rate hike will indeed be in the comings months as Yellen had previously hinted towards. The US figures also impacted the currency markets, as mentioned with the yen but both the pound and euro made gains on the dollar, up 0.79% 1.61% respectively.
The FTSE began Friday strongly as commodity related equities drove the index higher by almost 1%. The FTSE couldn’t hold onto this level of gains but did close the week at 6209.63, higher on the day by 0.39%. Oil climbed back above $50 before retreating to stand at c. $49.48 at the close of the FTSE, holding commodity related stocks like miners Fresnillo and Randgold at the top of the index.