Markets dive on back of disappointing US payrolls
COMPANIES in America employed fewer workers in May than forecast and workers dropped out of the labour force, indicating that government support is still needed to spur economic growth.
Private payrolls rose by 41,000, the US Labour Department figures showed yesterday, trailing the 180,000 gain forecast by economists. Including government workers, employment rose by 431,000, boosted by a jump in temporary census workers. The jobless rate fell to 9.7pc from 9.9pc.
Stocks fell and treasuries surged as the report raised concern the world's biggest economy was susceptible to shocks such as the European debt crisis.
The figures may be a blow to President Obama as congressional elections approach, and bolster forecasts that the Federal Reserve will keep rates low for "an extended period."
"The labour market is extremely weak and has been in a mild recovery," said Steven Wieting, market analyst at Citigroup Global Markets in New York. "Policy makers need to be careful. No one should be taking stability for granted."
The S&P 500 Index dropped 2.2pc. The 10-year treasury note rose, pushing the yield down to 3.21pc from 3.37pc on Thursday. (Bloomberg)