Investors are about to get very frightened as US unemployment drops like a stone

US unemployment has fallen way faster than expected in November. For once that good news is good news to Wall Street.

The headline unemployment rate dropped from 7.3 per cent to seven per cent. Analysts had predicted a fall to 7.2 per cent.

You might think that this is unambiguously good news for the US economy - but recently traders have been petrified that as the economy improves, the Fed will begin tapering quantitative easing and reducing available liqudity.

After yesterday's bout of strong US data - upwards revisions to third quarter GDP and lower than expected jobless claims - investors got scared that the Federal Reserve would pull away monetary support and stocks closed down.

Data this good would usually scare markets who've become hooked on so many asset purchases from the central bank. But apparently they can't make their minds up - US equities are up after the data.

Inflation still remains lower than the Fed's target, but the seven per cent number is the lowest since November 2008. A previously unthinkable taper in December now seems less ridiculous.

Paul Ashworth, chief US economist at Capital Economics, says that this report "gives the Fed all the evidence it needs to begin tapering its asset purchases" at this month's meeting.

There's other importance piece of data in this jobs release - the participation rate has risen to 63 per cent.