US jobs report clears path for rate rise by Federal Reserve

(c) Sky News 2017: <a href="http://news.sky.com/story/us-jobs-report-clears-path-for-rate-rise-by-federal-reserve-10796873">US jobs report clears path for rate rise by Federal Reserve</a>
 

A blockbuster February for employment in the US is being seen as locking-in a Federal Reserve rate hike on 15 March.

Official figures showed the unemployment rate falling to 4.7% from 4.8% the previous month, as the world's largest economy added 235,000 net new jobs.

Economists and markets had expected a figure just below 200,000.

There was also cheer on wage growth - rising at a rate of 2.8% versus 2.6% in January.

The data was eagerly awaited as chair of the US central Bank, Janet Yellen, had previously signalled it was on track to raise rates next week, barring a disastrous jobs report.

Should the Federal Reserve opt for a rise, it would be the third since the end of the financial crisis.

Any action would signal confidence in the economy despite a historically strong dollar and concerns about overall growth.

Job creation, unemployment and inflation have all approached the Fed's targets and President Donald Trump has pledged to bolster productivity and jobs through a major programme of spending on US infrastructure.

The dollar strengthened after the job numbers were released though it remained steady against sterling at 1.2170.

Equity markets were boosted by financial stocks - with banks set to benefit from the prospect of higher rates.

Luke Bartholomew, Aberdeen Asset Management (Frankfurt: 899502 - news) investment manager, said: "A March hike is a done deal."

He added: "The challenge for the Fed now is to ensure that the market doesn't start extrapolating a much more rapid series of hikes.

"Investors are comfortable with three hikes this year but any suggestion of four will probably cause a wobble."

Naeem Aslam, chief market analyst at ThinkMarkets, said the rate rise was pegged to the wage growth number

"Only if the number was extremely vile, then the Fed was going to stop their interest rate hike, but now it looks like that we are going to see a rate hike next week."

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