US jobs rise surpasses expectations but dollar falls after disappointing wage growth
The US economy was boosted by a surge in job creation during February. The month saw 235,000 new jobs created. As a result, unemployment fell to 4.7 percent and the labour force participation rate increased to 63 percent.
The rise in job numbers beat the expectations of many analysts who had predicted an increase of 200,000 during the first full month of the Trump presidency.
Trump Effect Or Long Term Trend?
The promise of a more friendly business environment under a Trump presidency may be boosting confidence and the labour market. Even so, employment gains in the US have been part of a slow and incremental long term trend. The US economy has experienced growth for nearly 100 consecutive months. This is the 3rd longest expansion in US history. Since 2010 approximately 16 million jobs have been created.
Education, healthcare and mining drive new job hires
Certain sectors accounted for the majority of February’s rise – mainly education, healthcare and mining. A rise in demand from overseas export markets bumped up job hires in manufacturing, while February’s warm weather boosted recruitment in the construction industry as projects could work through the clement conditions.
Federal reserve rate hike in March all but guaranteed
The positive data sets have increased the probability of a rise in the federal reserve’s benchmark interest rate rise. Economists were already expecting a quarter point rise following the March 14-15 meeting, and the odds of a rise have now hit 90 percent compared to 25 percent in the first week of February, according to the CME Group’s FedWatch program.
Business and consumer confidence at 9 year high
The employment numbers coincide with a marked rise in both business and consumer confidence, with the Gallup U.S. Economic Confidence Index reaching its highest level in nine years. However, although the numbers are encouraging, a rise in consumer and business spending is more important than sentiment. This will be essential for any of these trends to continue in a sustainable way.
Despite the jobs rise, the US dollar fell due to the reporting of slower than expected wage growth with the DXY index, which tracks the dollar’s performance against six of the world’s major currencies including the pound sterling, the euro and the Japanese yen, down 0.442 percent.