More evidence emerged today of a recovery in the world’s biggest economy as the US recorded its best month for job growth in nearly three years.
However, experts suggested it still would not persuade the US Federal Reserve to raise rates because inflation and wage growth are still too low.
The US added 321,000 more jobs in November, significantly higher than 213,000 in October and higher than the consensus forecasts of 230,000. It was the best month for jobs growth since January 2011.
The yield on US government bonds rose in reaction to the news as did the dollar against other major currencies, which indicates that the market has interpreted the data as supporting a slightly earlier rise in US interest rates.
But David Harris, senior investment director for Schroders’ US multi-sector fixed income team, said while the data supports shift away from the US Federal Reserve’s “super-accommodative zero-interest rate policy”, he doesn’t see an imminent rate rise as being likely.
He said the Fed “will no doubt continue to refer to weakness outside the US and the still-low inflation rate”, as well as the historically high underemployment rate.
Ben Brettell, senior economist at Hargreaves Lansdown, said even though the data could cause “speculation that a tightening of monetary policy is imminent” he still thinks “it looks unlikely that US rates will start rising until the second half of next year”.
Mr Brettell identified the lack of wage growth as the “fly in the ointment” that will stop any imminent rise in rates.
