Improving US job numbers present Fed dilemma

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Improving US job numbers present Fed dilemma

Improving US job numbers present Fed dilemma
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There was a brighter picture on the US labour front in June as job growth there increased more than expected.

Employers added 195,000 workers to their payrolls.

The numbers for April and May were also revised to show 70,000 additional jobs created in those months than previously reported.

The unemployment rate was unchanged from last month at 7.6 percent of the workforce.

Surveys showed that was because more Americans were encouraged enough by the economic situation to look for work.

All the job gains in June were in the private sector, while the number of people working for the government fell again.

Strengthening demand meant consumer-related areas such as retail and wholesale showed further gains.

The US central bank, the Federal Reserve, has tied its continued quantitative easing stimulus measures to the jobless total.

Job growth averaged 196,333 per month over the last three months, closer to the 200,000 jobs that economists say the Fed is seeking.

These latest numbers and other signs of a strengthening economy have economists increasingly expecting the Fed to begin winding down that stimulus as perhaps soon as this September, but certainly by next summer.

It is currently purchasing $85 billion (66 billion euros) in bonds each month in an effort to keep borrowing costs down and spur stronger growth.

The recent signals from Fed chairman Ben Bernanke that a start date for reducing bond purchases is approaching triggered a global sell off in stock and bond markets, which have come to rely on the Fed as a steady source of demand for financial assets.

Interest rates on everything from US Treasury debt to home mortgage loans have moved sharply higher, threatening to curtail credit for consumers and businesses.