‘Goldilocks’ jobs report keeps Fed on track for series of rate rises

‘Goldilocks’ jobs report keeps Fed on track for series of rate rises

Another exceptionally strong US jobs report has kept the Federal Reserve on track to deliver a series of interest rate increases this year even as moderating wage growth mitigates the immediate need for aggressive tightening, according to economists.

Hiring accelerated more than expected in February as the world’s largest economy added 678,000 jobs, the most since July, pulling the unemployment rate down to 3.8 per cent.

A bigger surprise was the lack of wage growth. Average hourly earnings flatlined last month, following a 0.6 per cent jump in January, but were up 5.1 per cent over the past 12 months.

And the job gains were widespread with strong increases in leisure and hospitality, healthcare, professional and business services, retail and construction.

“This is the Goldilocks employment report for the Fed and for the economy, because now we have a situation where growth is stronger than expected, and [wage] inflation is better than expected,” said Torsten Slok, chief economist at Apollo Global Management.

He added: “It definitely takes some of the pressure off the Fed in terms of rate hikes.”

“The wage data we got is good news for the Fed, but that doesn’t negate the fact that we should still be closer to neutral,” said Tiffany