While you were sleeping: US payrolls disappoint
Feb 6 (BusinessDesk) – Wall Street slipped as weaker-than-expected US payrolls data outweighed a better-than-expected
report on services industries, and fuelled doubt about the strength of the American economic recovery.
US private employers added 175,000 jobs in January, while December's gain in jobs was revised lower to 227,000, down
from the initially reported 238,000, according to ADP Research Institute data. Harsher-than-usual winter weather was
partly to blame for the smallest increase in five months.
Separately, the Institute for Supply Management said its services index rose to 54 in January, up from 53 in December.
That was slightly better than economists had anticipated.
"Markets are concerned and want to see that the US economy stays on track," Dan Dorrow, head of research at Faros
Trading in Stamford, Connecticut, told Reuters. “My view is the US economy is growing above trend and you can't conclude
too much from one month's worth of data.”
In afternoon trading in New York, the Dow Jones Industrial Average slipped 0.06 percent, while the Standard & Poor’s 500 Index fell 0.21 percent and the Nasdaq Composite Index slid 0.43 percent.
Slides in shares of Pfizer and Boeing, down 2.4 percent and 1.3 percent respectively, outweighed gains in shares of 3M
and Cisco, up 1.4 percent and 1 percent respectively, leading the Dow lower.
So far in 2014, the Dow has shed 6.6 percent, while the S 500 gave up 5.1 percent.
Investors will now watch Friday’s nonfarm payrolls even more closely to gauge the strength of the US labour market, a
key indicator for Federal Reserve policy makers. The Labor Department is forecast to show nonfarm payrolls grew by
184,000 last month, up from a gain of 74,000 in December, while the unemployment rate held steady at 6.7 percent.
"There's fear as we move into Friday's report that we're going to see a weather impact that is going to distort the
number and make it difficult to know if it is covering up something more substantial," Paul Mendelsohn, chief investment
strategist at Windham Financial Services in Charlotte, Vermont, told Reuters.
In Europe, the Stoxx 600 Index managed to end the day with a 0.1 percent increase from the previous close, as did the
UK’s FTSE 100. France’s CAC 40 closed marginally higher. Germany’s DAX fell 0.1 percent.
So far the year the DAX has shed 4.6 percent, while the FTSE 100 has lost 4.2 percent.
Kevin Lilley, head of European equities at Old Mutual Global Investors UK, remains upbeat.
“The European economy has only just started a recovery phase,” Lilley told Bloomberg News. “I’m optimistic we’ll see
gains for the year.”
(BusinessDesk)