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US unemployment data surprises market

The US stock market has been surprised at today's unemployment figures which show a rise to 10.2% in October which is the highest figure since April 1983. The figures, released by the US Labor Department, show a rise from the 9.8% in September and confirm that nearly 200,000 jobs were lost in the U.S. economy between September and October. So what next for the US economy?



While this is no doubt a short-term setback for those who believed the US economy was back on the growth path, we need to appreciate that unemployment will continue to rise even when an economy is improving. It is this lag between economic recovery and improvement in the employment figures which can and does cause misleading indicators along the way.



However, investors in both the US and UK stock market have been taken aback a little by the increase in unemployment and investors have cashed in their chips as we head for the weekend. Whether this will be a short-term blip or a potential peak in the short-term rally on the stock market remains to be seen but it does give a warning to investors that the road ahead may be rocky.



Despite claims that stock markets around the world have uncoupled themselves from the US, the reaction to today's figures would suggest otherwise.

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