US employers step-up hiring, but Fed still in picture

Monday, 6 August 2012 00:00 - - {{hitsCtrl.values.hits}}

Reuters: US employers in July hired the most workers in five months, but an increase in the jobless rate to 8.3 per cent kept prospects of further monetary stimulus from the Federal Reserve on the table.

Nonfarm payrolls rose 163,000 last month, the Labour Department said on Friday, breaking three straight months of job gains below 100,000 and offering hope for the ailing economy.

“As long as the unemployment rate is high, the central bank will have to consider further stimulus,” said California State University Channel Islands Economics Professor Sung Won Sohn.

While the report gave talking points to Republicans and Democrats for the upcoming general election, investors on Wall Street shrugged off the rise in the jobless rate and snapped up stocks.

The unemployment rate rose from 8.2 per cent in June, even as more people gave up the search for work and a survey of households showed a drop in employment.

The Federal Reserve on Wednesday sent a stronger signal that a new round of major support could be on the way if the recovery did not pick up. The labour market has slowed after hefty gains in the winter, spelling trouble for President Barack Obama.

A recent Reuters/Ipsos poll showed 36 per cent of registered voters believe Republican presidential candidate Mitt Romney has a better plan for the economy, compared to 31 per cent who had faith in Obama’s policies.