Optimistic Report Results
According to the US Labor Department, non-farm payrolls skyrocketed in the month of November. In the month, companies added 146,000 positions to the payroll, beating out estimates of a 90,000 gain. The widely positive figure was bolstered by gains in retail and other service providers, as losses in other sectors like manufacturing and construction were kept to a comparative minimum. Retail stores added 53,000 jobs for the month with additions also seen in mining, leisure and auto sector supporting a positive print. Meanwhile, construction companies lost 20,000 jobs in the month, as government payrolls were trimmed by 1,000.
Making the report even more positive was the fact that agency findings reflected a minimal impact by Hurricane Sandy. Fears were abound that negative effects from the perfect storm, that hit the Northeast in late October, were set to skew the report’s findings to the downside.
Not All Rosy
Although widely positive, the decline in the national unemployment rate is unfortunately being questioned. For November, the rate dipped to 7.7% from 7.9%, the lowest mark in almost 4 years. However, a look deeper and it seems the decline was supported by a shrinking of the pool of potential workers, and not a decrease in the unemployed. The sentiment is being reflected by the labor participation rate, which fell in the month to 63.6% in the month – typically at 66% or above. Simply put, it seems that more people are leaving the labor force on their own and not through finding a job.
Nonetheless, the six figure addition is adding to already growing speculation of a US recovery in 2012. As such, US dollar bulls are out in full force. At this point, a close below 1.2950 would support a near term test of 1.2850, the next viable support level for the single currency. The level should get some additional support from the 1.2728 38.2% fib figure just below.
Source: FXTrek Intellicharts