Non-farm payrolls jumped by 255,000 jobs last month as hiring rose broadly after an upwardly revised 292,000 surge in June, the US Labor Department said yesterday.
Advertisement
Still, he said, the Fed continues to eye worldwide developments, which could influence the Fed’s decision on when next to raise rates.
The U.S. central bank hiked interest rates in December for the first time in almost a decade, but has held them steady since then amid concerns about persistently low inflation.
The recent strength in employment adds to the growing list of economic data that suggest the USA can weather the global economic storms raging around the world, from the persistent slowdowns in China and Japan, the post-Brexit volatility in Europe and weakness in other global economies.
The second straight month of robust job gains is a boost to the economy after growth averaged barely a 1 per cent annual rate in the last three quarters. “This is definitely a very solid report, and I think Fed policymakers have to be very pleased with this”, said Kathy Jones, fixed income strategist at Charles Schwab in NY. U.S. “The economic recovery has clearly come a long way, though it is not yet complete…but with the economy performing well and expected to do so, the committee judged that modest increase in the Federal Funds rate is now appropriate”.
Japan’s economic growth is also expected to have slowed last quarter, weighed down by weak domestic demand and stagnant exports, a Reuters poll found on Friday. The earnings are up 2.6% year-over-year. The labor force participation rate also edged higher and the broader measure of underemployment, known as U-6, held at 9.7 percent.
Meanwhile, more than one 2016 hike is also unlikely given that domestic and global political risks may continue to unsettle financial markets, with a number of important and outcome-uncertain political events ahead on the 2016 calendar. Strong July employment report after healthy June numbers suggest that the May numbers were highly unusual. The July’s report released on Friday strengthened their confidence and gave them some reassurance. Unless we see a significant improvement in USA labor market data, a meaningful pickup in USA inflation measures and further stability in global financial markets, much more policy normalization may be hard for the Fed to accomplish.
With economic growth comfortably within the government’s target range but credit growth near all-time highs, analysts have pared back calls for the first Chinese interest rate cut since October. However, the current strong jobs data has increased the chances of rise in interest rates.
Advertisement
Stock markets jumped on the jobs data – with traders citing positive sentiment from not only the United States figures but also the Bank of England’s stimulus programme announced on Thursday.
