According to the U.S. Labor Department, U.S. payrolls rose in November beyond the Fed’s expectations and hourly earnings should hit 2.6 percent this month. This is why the solid jobs report should dispel any doubts about December hike, experts believe.
Analysts say that the surge in employment reported for November is a clear sign that the U.S. economy bounced back, which would make a federal rate hike later this month very probable, as Fed Chair Janet Yellen had recently promised. If Fed officials finally manage to hike the benchmark interest rate, it would be the first time in nearly a decade.
The report, which was issued by the U.S. Labor Department on Dec. 4, shows that nonfarm payrols rose twice as much as Fed analysts had estimated that it would be healthy to the economy. On Dec. 3, Ms. Yellen said at a Congress’s Joint Economic Committee meeting that the U.S. economy would need a 100,000 advance in payroll every month to integrate all new comers into the labor market. In November, however, payrolls rose by 211,000, the recent report reveals.
The rise does not include non-for-profit workers, farm employees, and private household workers. Labor officials also said that after revising data for October and September, they learned that 35,000 new jobs were left unreported.
The fact that unemployment rate is now at a seven year low means that people are now confident in the jobs market, experts said. Jobless rate is now at 0.5 percent.
UniCredit’s chief economist Harm Bandholz believes that the latest unemployment data should dispel any doubts about the incoming rate hike later this month. He is confident that the labor department’s recent figures are a clear indication that the labor market wants the rate hike as much as Wall Street does.
The jobs report was released just a day after Ms. Yellen told federal regulators that the U.S. economy finally met the criteria the Fed wanted for an interest rate rise. The key interest rate wasn’t hiked since June 2006.
According to a recent survey, U.S. banks are confident that the much anticipated rate hike would occur during a meeting slated for Dec. 15. But the U.S. central bank plans to normalize the interest rate gradually, which raised concerns that the Fed may be behind the curve in hiking borrowing costs.
JPMorgan Chase & Co analysts think that the feds’ approach may require for the central bank to raise the rate several times next year, which may be even more than both the Street and Fed analysts expect.
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