US job growth slows, European economy remains robust

MarketWatch reports that US jobs growth was sluggish in April.

U.S. jobs growth slowed in April to 88,000 with 12% fewer added jobs than economists had forecast, and the unemployment rate ticked up to 4.5%, the Labor Department said Friday.

In April, average hourly wages increased 2 cents, or 0.2%, to $17.25. Average wages rose 3.7% in the 12 months ended in April. The length of the average workweek fell to 33.8 hours from 33.9 hours.

According to Bloomberg, US Treasuries rose yesterday, but so did stocks. Takeover speculation may have helped the latter, but if stocks are being driven by liquidity, as many believe, the weak jobs report is not necessarily bad news for stocks, at least in the short term.

In Europe, weakness in the economy has been less of a concern. Yesterday, Eurostat reported that retail sales rose by 0.5 percent in the euro area and by 0.6 percent in the EU27.

However, Bloomberg reports that services growth slowed in April.

Royal Bank of Scotland Group Plc's services index fell to 57 from 57.4 in March. The index is based on a survey of purchasing managers by NTC Economics Ltd. and has held above 50, indicating expansion, for 46 straight months. Economists expected the gauge to rise to 57.6, according to the median of 33 estimates in a Bloomberg survey.

Economists were not too concerned though.

"Taken in conjunction with other, more upbeat indicators," today's report is "still consistent with robust growth," said Sandra Petcov, an economist at Lehman Brothers in London. "Its level is still high."...

Today's report "provides encouraging signs that the euro- area service sector has settled into a robust pace of growth, having shrugged off the VAT increase in Germany and recent interest-rate rises," said Jacques Cailloux, chief euro-region economist at Royal Bank of Scotland in London. "The outlook is promising."

Rather, inflation remains the concern.

"Domestic demand seems now strong enough to bolster the pricing power of European companies in the service sector, thereby increasing medium-term inflation risk," said Peter Vanden Houte, an economist at ING Bank in Brussels.

A gauge of input prices rose to 59.3 in April from 58.9 in March while a measure of prices charged increased to 54.4, the highest since June last year, today's report showed.