Robust jobs report pressures Yellen to raise interest rates

The strong jobs report was good news for Main Street — and bad news for Wall Street.

The US economy extended a healthy streak of hiring in February by adding 295,000 jobs. The unemployment rate fell to 5.5 percent, the lowest since 2008.

It also brought the average monthly gain in jobs for the past six months to 303,000 — 25 percent above the 242,000 average for the previous six-month period.

The Labor Department's report for February was so bullish, in fact, it signaled the era of record low interest rates is coming to an end.

The stock market has been the biggest beneficiary of the Federal Reserve's easy-money policies. With the economy on more solid footing, however, the Federal Reserve is feeling the pressure to raise rates sooner.

The Dow Jones Industrial Average fell 1.54 percent, or 278.94 points, to 17,856.78 on fears the central bank will move to raise rates by June.

"The market's negative reaction Friday tells you just how great the jobs report is," said New York University economics professor Joe Foudy. "It's now betting on a 50-50 rate hike in June."

Michael Arone, chief investment strategist at State Street Global Advisors, agreed the report would accelerate the timetable for what he called "interest-rate normalization."

"While the expectation was the Fed would raise rates in September, it has always said the decision would be data-dependent. Well, the data are now telling us we no longer need emergency-level interest rates," Arone said.

In addition to shaving 0.2 percentage points off January's 5.7 percent unemployment rate, February marked the 12th consecutive month of at least 200,000 job additions — a hiring pace not seen since 1995.

Not all aspects of the report were bullish, however. The civilian labor force participation rate fell to 62.8 percent during the month — from 62.9 percent in January — and the year's net job gain over the working population gain was just 1.7 million.

"That basic comparison is moving in the right direction, but slowly," said Brendan O'Flaherty, an economics professor at Columbia University. "At this rate, it will take six years or so more before the employment-population ratio reaches the level that people thought was normal before the Great Recession."

Average hourly earnings, which many consider another impediment to recovery, rose 3 cents last month to $24.78. That took the year-over-year gain to 2.0 percent — hardly the sign of an overheating economy.

Yet wage stagnation may not be as intransigent as the data suggest, said Mark Zandi, chief economist at Moody's Analytics, who cited a workforce undergoing significant shift.

Baby boomers are retiring at high salaries, while millennials are starting their careers at low salaries. This imbalance, he said, has skewed the average wage downward.

Anda sedang membaca artikel tentang

Robust jobs report pressures Yellen to raise interest rates

Dengan url

http://bahayaprostat.blogspot.com/2015/03/robust-jobs-report-pressures-yellen-to.html

Prostat