US jobs growth surges but more disappointing data for Eurozone

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US jobs growth surges but more disappointing data for Eurozone


Mario Draghi
Mario Draghi

US job growth surged in January, with employers hiring the most workers in 11 months, pointing to underlying strength in the economy despite a darkening outlook that has left the Federal Reserve wary about more interest rate hikes this year.

The US Labour Department’s monthly employment report yesterday showed no “discernible” impact on job growth from a 35-day partial government shutdown. But the shutdown pushed up the unemployment rate to a seven-month high of 4pc.

The report came two days after the Fed signalled its three-year interest rate hike campaign might be ending because of rising headwinds to the economy, including financial market volatility and slowing global growth. “The Fed chickened out on further rate hikes this year and boy are they ever misreading the tea leaves on where the economy is going next,” said Chris Rupkey, chief economist at MUFG in New York. “US companies have not let up one bit on their hiring in response to risks out there in the world economy.”

It was a different story in Europe where Eurozone inflation shrank, falling further from the target set by the ECB, headed by Mario Draghi, inset, and providing yet another reason for the bank to slow down in removing stimulus.

Inflation in the 19 countries sharing the euro slowed to 1.4pc from 1.6pc a month earlier, another soft reading for an economy suffering its biggest slowdown since its debt crisis.

The Eurozone is barely growing this quarter and the ECB has already warned that risks are skewed to the downside, suggesting that more negative news may be in the pipeline.

Reuters

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Irish Independent

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