There was a sharper than expected rise in the number of jobs created in the US in June, at 288,000. Economists had forecast a more modest rise in non-farm payrolls of 212,000.
Meanwhile, the data from the US Bureau of Labor Statistics showed the unemployment rate fell to 6.1% – the lowest since Lehman Brothers collapsed in September 2008 – from 6.3% in May. Below, economists give their take on the numbers.
Rob Wood, economist at Berenberg, said the rise in job gains (following a 224,000 increase in May) signalled solid momentum in the US economy.
"This report changes nothing for the tapering outlook. The Fed has, rightly in our view, assumed that underlying US momentum remains solid. With monetary policy extremely loose and government cuts easing markedly, US growth should remain strong and employment growth should remain solid.
We look for the Fed to continue cutting bond buying by $10bn at each meeting until stopping purchases in October." Rob Carnell, chief economist at ING Global, said the US Federal Reserve would need to see bigger wage rises (2% annually in June) before changing its policy stance.
"Without a clear step up in wages, and whilst the unemployment rate remains 6-something percent, we suspect the Fed will be loth to change its formal stance with respect to the taper, or to the possibility of normalising rates.
"The time is soon coming that the FOMC will have to change its tack with respect to its policy stance, and forward guidance. Today's release takes us a little closer to that point, but as FOMC chair Yellen's recent testimony shows, they are not there yet."
Dennis de Jong, managing director at UFXMarkets, said it was good news as Americans prepare for their Independence Day celebrations on Friday.
"This is the fifth successive month the reading has risen above 200,000 with job growth significantly rebounding this quarter following a poor start to the year. The third quarter officially opened yesterday ahead of Independence Day celebrations.
Positive news has been sparse of late and this is as good an excuse as any to enjoy this weekend's fireworks."
Angus Campbell, senior analyst at FxPro: "Many investors have been waiting for stronger evidence that the world's largest economy is in good shape and today certainly does that. This will allow the Federal Reserve to continue in its tapering and even prepare the ground for raising rates next year."
Tanweer Akram, senior economist at Voya Investment Management: "Job growth has been decent since 2011 In the past three months job growth has been strong; it averaged 272K per month.
Despite the decent growth in the number of jobs, average hourly earnings have risen at a moderate pace. In June, average hourly earnings rose 2.0% year on year, while CPI inflation rose 2.1% between May 2013 to May 2014.
The restraint in wage means that inflationary pressures are likely to stay muted in the coming months." Marcus Bullus, trading director of MB Capital: "Someone attached the jump leads to the US jobs market in June. The markets will go into the long weekend on a buzz, while strong upward revisions in April and May will add to the feel-good factor.
"An ongoing concern is that wage growth is still relatively muted and this is almost certainly a legacy of the protracted fall-out from the depression. While companies are a lot more confident these days, many have been instilled with a new conservatism when it comes to wage costs.
"But over time, expect wages, too, to pick up in the way that job levels are currently.The US economy has a way to go yet, but it appears to be on the right track after a sluggish start to the year."
theguardian.com
Meanwhile, the data from the US Bureau of Labor Statistics showed the unemployment rate fell to 6.1% – the lowest since Lehman Brothers collapsed in September 2008 – from 6.3% in May. Below, economists give their take on the numbers.
Rob Wood, economist at Berenberg, said the rise in job gains (following a 224,000 increase in May) signalled solid momentum in the US economy.
"This report changes nothing for the tapering outlook. The Fed has, rightly in our view, assumed that underlying US momentum remains solid. With monetary policy extremely loose and government cuts easing markedly, US growth should remain strong and employment growth should remain solid.
We look for the Fed to continue cutting bond buying by $10bn at each meeting until stopping purchases in October." Rob Carnell, chief economist at ING Global, said the US Federal Reserve would need to see bigger wage rises (2% annually in June) before changing its policy stance.
"Without a clear step up in wages, and whilst the unemployment rate remains 6-something percent, we suspect the Fed will be loth to change its formal stance with respect to the taper, or to the possibility of normalising rates.
"The time is soon coming that the FOMC will have to change its tack with respect to its policy stance, and forward guidance. Today's release takes us a little closer to that point, but as FOMC chair Yellen's recent testimony shows, they are not there yet."
Dennis de Jong, managing director at UFXMarkets, said it was good news as Americans prepare for their Independence Day celebrations on Friday.
"This is the fifth successive month the reading has risen above 200,000 with job growth significantly rebounding this quarter following a poor start to the year. The third quarter officially opened yesterday ahead of Independence Day celebrations.
Positive news has been sparse of late and this is as good an excuse as any to enjoy this weekend's fireworks."
Angus Campbell, senior analyst at FxPro: "Many investors have been waiting for stronger evidence that the world's largest economy is in good shape and today certainly does that. This will allow the Federal Reserve to continue in its tapering and even prepare the ground for raising rates next year."
Tanweer Akram, senior economist at Voya Investment Management: "Job growth has been decent since 2011 In the past three months job growth has been strong; it averaged 272K per month.
Despite the decent growth in the number of jobs, average hourly earnings have risen at a moderate pace. In June, average hourly earnings rose 2.0% year on year, while CPI inflation rose 2.1% between May 2013 to May 2014.
The restraint in wage means that inflationary pressures are likely to stay muted in the coming months." Marcus Bullus, trading director of MB Capital: "Someone attached the jump leads to the US jobs market in June. The markets will go into the long weekend on a buzz, while strong upward revisions in April and May will add to the feel-good factor.
"An ongoing concern is that wage growth is still relatively muted and this is almost certainly a legacy of the protracted fall-out from the depression. While companies are a lot more confident these days, many have been instilled with a new conservatism when it comes to wage costs.
"But over time, expect wages, too, to pick up in the way that job levels are currently.The US economy has a way to go yet, but it appears to be on the right track after a sluggish start to the year."
theguardian.com
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