Fall in US jobless

Published in the Daily Telegraph, August 2009 by Jenny Dillon

Fears that US job figures, due out on the weekend, would be disastrous pulled the Australian market down on Friday.

But the fear was unfounded, with US Labor Department data showing US jobless down at 9.4 per cent, the first fall in 15 months.

It was good enough news for the Dow Jones to finish its week on a high and it should be good enough for local markets to pick themselves up again today, moving on from the All Ords close of 4302.1 points.

"Our stock market will open higher," CMC Markets analyst David Taylor said.

The [US] unemployment report bodes very well for the long-term recovery story because it wasn't just better but a tot better than expected," he explained.

The Dow Jones index leaped 114 points, or 1.2 per cent, to 9370, its highest close since early November last year, buoyed by the idea the US economy was moving out of recession.

But while the market will be in a good mood today, analysts warn it won't last.

"Last week, the All Ords rose to its highest level since October 2008 but the market is now displaying signs that the current bull run is slowing," Wealth Within's Dale Gillham said.

"There is an old saying that what goes up fast usually comes down fast and the All Ords index has moved up at a faster rate, over the past five months since the low in March, than what occurred following the long-term low in March 2003."

The sentiment is shared by US analysts and senior bankers with this week's Federal Open Market Committee meeting expected to maintain official rates at 0-0.25 per cent.

Despite the euphoria over the jobs figures, other figures indicate that the US economy is still falling, even if the fall is slowing.

Therefore, most economists believe that the US Federal Reserve will not make any changes to interest rates until early 2010.

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