Morning Market Roundup: Unemployment Falls, Stocks Soar, UBS Investigation

Here’s what’s important in the financial world this morning:

Unemployment: The U.S. jobless rate dropped unexpectedly in January to the lowest level in three years, Labor Department figures showed today in Washington.

The national unemployment rate fell to 8.3 percent last month, the lowest since February 2009, as the economy added 243,000 jobs.

Now that employers are seen stepping up new hires, doubt has been raised as to whether the central bank can keep interest rates low for another two years.

Today’s report includes revisions adding a total of 60,000 jobs to payrolls in November and December. The Labor Department also revised December’s gains to 203,000, from an initially reported 200,000.

Manufacturing, construction, temporary help agencies, accounting firms, restaurants, and retailers all contributed to the jump in employment, with the number of industries showing job gains climbing to 64.1 in January, from 62.4 a month earlier.

Factory workers averaged 41.9 hours of work each week — the most since January 1998 — while overtime hours climbed to the highest since March 2007, indicating that employers are squeezing as much work out of their existing employees as they can while still having to seek new hires. Manufacturing payrolls increased by 50,000 in January, the most in a year.

Employment at service-providers increased 162,000, reflecting faster job gains in retail, transportation, and leisure and hospitality. Construction companies added 21,000 jobs last month.

The private sector added a total of 257,000 jobs in January, while government payrolls decreased by 14,000, reflecting cuts at federal and local levels.

Of course, as mentioned before, there are some things to consider when talking about these new, low unemployment figures. Zero Hedge has some interesting reminders:

A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that’s not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation. As for the quality of jobs, as withholding taxes roll over Year over year, it can only mean that the US is replacing high paying FIRE jobs with low paying construction and manufacturing. So much for the improvement.

Markets: U.S. stocks are opening sharply higher after the unemployment rate dropped to the lowest in two years.

Before the market opened Friday, the Labor Department said companies hired 243,000 employees in January, the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent.

The S&P 500 index added 11 points, or 0.9 percent, to 1,337. The S&P 500 is on track to rise for the fifth straight week, the longest weekly winning streak since January of 2011.

The Dow Jones industrial average jumped 108 points, or 0.8 percent, to 12,812.

The Nasdaq rose 27 points to 2,887.

The U.S. jobs figures helped stocks and the euro to rally on Friday despite further evidence that the 17-country eurozone is heading for recession.

UBS: The investigation proceeds into how a rogue trader at UBS made unauthorized trades that resulted in $2.3 billion in losses. A London court has refused bail for Kweku Adoboli, the trader involved in the scandal.

In addition, the Financial Services Authority of Great Britain and the Swiss Financial Market Supervisory Authority have launched a joint investigation into the scandal to determine how much UBS is culpable.

UBS, for its part, is conducting its own internal investigation and claims that Adoboli was acting out of all of the bank’s policies.

EU:  Unions and employers’ associations in Greece on Friday rejected private-sector wage cuts, as demanded by the country’s international bailout lenders if Athens is to receive a crucial, second rescue package.

The impasse appeared to be holding up final negotiations for massive new debt agreements – a eurozone finance ministers’ meeting, which had been expected for Monday to back the new proposals, was postponed to later in the week.

In a letter to the government Friday, unions and employers said they rejected proposals for the minimum wage to be slashed and annual salaries to be paid to Greek workers in 14 installments.

[Editor’s note: portions of the above originally appeared on Wall St. Cheat Sheet.]

The Associated Press contributed to this article.