Headline payrolls rose only 96,000, whereas the consensus forecast was that 130,000 would be created – and the 0.2 per cent fall in the headline unemployment rate was mainly due to withdrawals from the labour force.
“This puts QE3 firmly back on the agenda at next week’s Federal Open Markets Committee (FOMC) meeting,” said James Knightley at ING.
Monetary policymakers have suggested as much in the previous FOMC meeting’s minutes. “Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recover,” the minutes read.
Friday saw big rises in equities, commodities and metals as markets priced the expectation in. The FTSE 100 was 0.3 per cent up, while gold hit a six-month peak, and copper neared a four-month peak. The dollar also weakened to its lowest level since late May.
“Prices are rising in anticipation of a potential policy response to a weak situation,” said Duncan Hobbs, metals market analyst at Macquarie in London.