US economy continues to heat up

The United States economy showed further signs of heating up as the Department of Labour revealed 295,000 additional jobs had been added during February.

US economy continues to heat up


This brought the unemployment rate down to 5.5% from 5.7% last month.

The news will up the pressure on Janet Yellen and her Federal Reserve colleagues to begin an interest rate raising cycle to ensure inflation is kept in check.

Yellen has persistently made dovish comments in recent news conferences, indicating a first rise since the financial crisis is still some way off however it increasingly appears that the data will force her hand in the near future.

For yet another month, the headline numbers in US job creation look hard to beat,” said IG market analyst Chris Beauchamp. “The 295,000 jobs created was far ahead of average estimates, and yet another month of job creation above 200,000 is likely to turn the screws on Janet Yellen and her team.”

“They can still point to a lack of real wage growth as a reason to steady their hand, which still suggests a September rather than June increase, but markets are ignoring the more nuanced approach in favour of a broader ‘buy the dollar, sell equities’ mode,” Beauchamp noted.  In comparison to Europe US equities have looked much less buoyant of late, and a short bout of profit-taking will take some heat out of the market generally, while still leaving US indices well up on the year so far.”