The dollar climbed sharply against all the major currencies Friday after a report revealed that the US unemployment fell to a new five-year low of 4.4%, while the previous month nonfarm payroll figures were revised sharply higher.
The euro fell to $1.2700 from $1.2755 before the figures were released, and was up at CHF 1.2540 against the Swiss franc, JPY 117.90 against the yen while sterling fell to $1.8990.
Employers in the U.S. added 92,000 jobs in October, and payroll growth in prior months was revised higher for the second time in a row, pushing the unemployment rate down to a five-year low.
Last month’s gain in employment followed increases of 148,000 in September from 51.000 previously reported and 230,000 in August, also higher than previously reported. The jobless rate fell to 4.4 percent from 4.6 percent the previous month.
Increased job growth will fuel wage gains, keeping consumers spending and providing a lift for an economy that faltered last quarter, economists said.
Employment in service-producing industries, which include retailers, banks and government agencies, rose 152,000 last month after increasing 154,000 in September, today’s report showed.
Manufacturers shed 39,000 jobs last month, the biggest drop since July 2003, after cutting 12,000 jobs in September. The manufacturing workweek rose to 41.2 hours from 41.1 in September and overtime held at 4.3 hours.
Builders shed 26,000 jobs, the most since February 2003, after adding 5,000 jobs in the prior month. Falling home sales are prompting homebuilders to reduce projects and hire fewer workers.
The average work week rose to 33.9 hours from 33.8. Economists expected hours to remain unchanged.
Workers’ average hourly earnings rose 0.4 percent, or 6 cents, after increasing 0.2 percent the previous month. Economists expected a 0.3 percent increase in hourly wages. Earnings were up 3.9 percent from October 2005.
Average weekly earnings rose to $573.25 last month from $569.53 in September.
Consumers will begin the holiday season with more cash in their pockets, anchoring forecasts for improved economic growth in the fourth quarter. Consumers may spend 6.5 percent more during the holidays than a year earlier, accounting firm Ernst & Young LLP said. The season accounts for a fifth of sales at retailers such as Wal-Mart Stores Inc. and Federated Department Stores Inc. and is the most profitable period for most stores.
Because fewer people are entering the labour force than in years past, smaller payroll gains are needed to keep the unemployment rate steady, economists said. That number is now about 130,000 per month, Fed Chairman Ben S. Bernanke said in testimony to Congress in July.
