Solid job gains are encouraging sign for US economy

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Solid job gains are encouraging sign for US economy

Solid job gains are encouraging sign for US economy
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The US labour market continues to show steady improvement with employers there substantially stepped up hiring.

A total of 236,000 new jobs were created in February.

That was way more than the consensus forecast by economists who had expected a gain of around 160,000.

As a result the jobless rate fell to its lowest in four years at 7.7 percent of the working population, down from January’s 7.9 percent. The decline reflected both gains in employment and people leaving the labour force.

The number of hours worked increased, as did average hourly earnings.

The upbeat report was another sign of the US economy’s fundamental health.

However the US central bank, the Federal Reserve, is likely maintain its stimulus measures by pumping money into the economy. It is currently buying $85 billion of bonds each month with newly printed cash.

Fed chairman Ben Bernanke has repeatedly said they will keep doing that until there is a substantial improvement in the labour market outlook.

What is not clear is if the job creation momentum is strong enough to weather the higher taxes and deep government spending cuts that started on March 1st after the White House and the US Congress failed to reach a deal to avoid them.

Trending higher

Job gains in February were well above the 195,000 monthly average for the three months through January.

Even though the trend is improving the pace of gains is still below the roughly 250,000 jobs per month over a sustained period that economists say is needed to significantly reduce unemployment.

“This was a strong number and one of those rare cases where we were firing on all cylinders,” said Jacob Oubina, a senior US economist at RBC Capital Markets in New York.

But the data was not strong enough to deter the Federal Reserve in its efforts to foster even faster economic growth through its policy known as quantitative easing.

“We’re in a sweet spot of sorts with the data showing a more robust recovery, which supports stocks and the dollar, yet not quite strong enough to declare an end to quantitative easing,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.