Employment in US surged last month as America’s economy continued to perform strongly despite being battered by inflation and global gloom
Employment in the US surged last month as America’s economy continued to perform strongly despite being battered by inflation and global gloom.
Official figures showed 517,000 jobs were created last month – taking unemployment down to 3.4 per cent, the lowest level since 1969. The number was much higher than forecast, as economists had pencilled in a gain of 185,000.
It gave the dollar a boost, and knocked the pound, which fell below $1.21, after trading above $1.22 earlier in the day.
A weaker pound benefits many companies in the Footsie that earn money overseas, such as in the US, as the cash is worth more when it is brought back to the UK.
But analysts noted the hot jobs market was likely to mean more interest rate hikes from the Federal Reserve, as it tries to bring down inflation to 2 per cent.
Boost: Official figures showed 517,000 jobs were created last month – taking unemployment down to 3.4 per cent, the lowest level since 1969
‘Investors were hoping for further indications of a softening US labour market that might permit the US Fed to moderate its rate hikes,’ said Rob Clarry from financial services firm Evelyn Partners.
‘While this doesn’t necessarily spoil that narrative yet, it might discourage the interpretation that there will be just one more 0.25 per cent hike before the Fed’s much-discussed ‘pause’,’ he added.
The US central bank sparked hopes it could ease its pace of rate hikes earlier this week with a 0.25 percentage point rise to 4.5 per cent-4.75 per cent. It was lower than December’s half-point hike and a series of three-quarter point rises last year.
But the job numbers are likely to start speculation of steeper hikes returning to tame inflation. The data did not seem to boost wages, with hourly pay up only 0.3 per cent month-on-month despite year-on-year pay rising 4.4 per cent, nearly double the historic average.