The US unemployment rate is well under 5% after six years of continuous employment growth. The latest figures for February continue this admirable performance and according to the US Bureau of Labor Statistics, 235,000 jobs were created in the non-farm sector in February against expectations of 200,000. After revisions to previous months’ figures, the unemployment rate fell from 4.8% to 4.7% as the participation rate rose 0.1% to 63.0%. The US has not had a negative employment growth figure since September 2010 or for 77 months.
ANZ Research said markets had already factored the risk of higher-than-expected numbers and US bond yields eased back, as did the US dollar. However, the main interest in the employment report was its status as the final hurdle which needed to be cleared for the US Fed to raise rates at its mid-March meeting. As ANZ put it, “To be fair, the US jobs report would have had to have been an absolute shocker to derail prospects for a Fed rate hike this week. It wasn’t, in fact it was pretty good across the board and so serves as the final green light for the Fed to lift rates once again.” Westpac agreed, saying “Overall, this is a strong report for the labour market which is consistent with previous tight jobless claims readings, the ADP report, and consumer and small business sentiment. It should remove any doubt the Fed will hike on 15 March, with the main question now being the pace of tightening thereafter.”