US employment increases but eurozone economic indicators deteriorate

We got another positive economic report from the US on Friday. US nonfarm payrolls increased by 200,000 in December, pushing the unemployment rate down to 8.5 percent from 8.7 percent in November.

Nevertheless, US stocks dropped on Friday as investors appear focused on the problems in Europe. The euro touched a 15-month low against the US dollar while Spanish and Italian yields rose.

Negative European data on Friday provided reasons for investors to remain concerned. An indicator of economic sentiment in the euro area fell to 93.3 in December from 93.8 in November. Eurozone retail sales fell 0.8 percent in November while unemployment remained at a 13-year high of 10.3 percent. Factory orders in Germany plunged 4.8 percent in November, the most in almost three years.

And to add to the negativity in Europe, Fitch Ratings cut Hungary’s credit rating to junk on Friday.