Positive US jobs numbers add to rate rise speculation

The US economy added a net 195,000 new jobs in June, official figures show.

The figure was well above economists’ expectations of 165,000. Revisions to data for April and May added a further 70,000 jobs to previous estimates.

The jobless rate remained steady at 7.6% of the workforce, according to the data from the Bureau of Labor Statistics.

The dollar and US bond yields jumped as markets expectations rose that interest rates will start rising in a year.

The euro fell three quarters of a cent against the dollar to $1.282, while gold fell almost 3% to $1,214.36 an ounce.

The yield on 10-year Treasury bonds rose from 2.5% to 2.68% to their highest level in almost two years.

Treasury bonds – the US government’s cost of borrowing – provide an indication of when markets expect the US Federal Reserve to begin raising interest rates, with many analysts now predicting that a move could come as soon as the end of 2014.

The news was initially welcomed on Wall Street, where the Dow, S&P 500, and Nasdaq all opened higher.

They turned negative mid-morning but regained the higher ground by afternoon trading.

“US employment data came out on the strong side of expectations,” wrote Brown, Brothers, & Harriman in a note to clients.

“The jobs data will strengthen expectations of tapering Fed asset purchases,”

Economists paid close attention to the number this month due to concerns that the US Federal Reserve might begin to wind down – or “taper” – its policy of propping up the US economy by buying up debts with newly-created money.

 Comments by chairman Ben Bernanke in June that indicated that positive economic data in the coming months might lead to tapering of the Fed’s bond buying had roiled markets.

 If the US economy continues to add jobs at this pace, the unemployment rate should fall from its current 7.6% to 6.5% by the end of 2014. This is the number the Fed has said the US jobs market must reach before it will end its programme of suppressing rates.

Leisure and hospitality jobs saw the biggest gains in June, as employers hired workers for the summer season.

The data eased fears that the “sequester” – a package of austerity measures that hit the economy in January – would have a negative impact on the jobs market.

The government shed 7,000 jobs in June, slightly less than expected.

Manufacturing, once a bright spot of the recovery, has continued its recent trend of job losses.

This has prompted some to question President Barack Obama’s commitment to the manufacturing sector.

“The president laid out a goal of creating a million new manufacturing jobs in his second term. That effort is off to a terrible start,” said Scott Paul, president of the Alliance for American Manufacturing, an industry trade group.