‘We continue to expect the Fed to raise its policy rate by an above-consensus four times this year.’ – Paul Ashworth, Capital Economics
The US private sector created more jobs than expected last month, providing support for a Fed interest rate hike on Wednesday. The Bureau of Labor Statistics reported on Friday that nonfarm payrolls rose 235,000 in February, while analysts expected nonfarm employment to climb 196,000 in the reported month. Meanwhile, January’s gain of 227,000 was revised up to 238,000. The construction sector contributed most to the February gain, adding 58,000 jobs. Over the past six months, the sector created an average of 177,000 jobs per month Data also showed average hourly earnings advanced 0.2%, falling behind analysts’ expectations for a 0.3% increase. January’s rise of 0.1% was revised up to 0.1%. The jobless rate came in at 4.7% for February, marginally down from the prior month’s 4.8% and in line with market forecasts. Over the past three months, the US private sector added an average of 209,000 jobs per month. The better-than-expected NFP report combined with rising inflation are likely to force the Federal Reserve to raise rates for the first time this year on Wednesday, during its policy meeting. Back in December 2016, the Central bank projected at least three rate hikes in 2017. Analysts suggest that the US labour market is at or close to full employment.