4th March 2016
Figures from the US show 242,000 jobs were created during February, raising the prospect of an early rate rise.
The Bureau of Labor Statistics shows 242,000 jobs were created ahead of the 195,000 that markets had expected and unemployment remained steady at 4.9%.
The December and January figures were also revised upwards.
Helel Miah, investment research analyst at The Share Centre, said while the job figures show the economy is heading in the right direction, there was some caution around wages.
‘This is very good news given the market volatility and fears of slower growth since the beginning of the year and shows that the world’s most important economy is still on the right track,’ he said.
‘However, the fall in month on month wage rates of 0.1% will raise caution and will continue to suggest that there remains slack within the US economy. Participation remains close to historic lows although it did rise for the most recent month to 62.9%.’
Miah said that overall ‘this is an encouraging set of numbers and the US dollar has appreciated upon the news, with the implication that the Federal Reserve may raise rates sooner’.
He added: ‘However, given that oil prices are low and inflation will struggle to pick up, we believe that this will still be some way off, the earliest being at the end of 2016. The initial reaction on stock markets was also positive, suggesting that more importance is beginning to be placed on better economic growth than the benefits of having interest rates for longer.’
The news ‘reaffirms our view that equities remain the asset class of choice, with good income levels and the prospects of capital growth for those willing to accept the risk’, said Miah.
‘Investors who are seeking a fund with exposure to the US might be interested in the JPM US Equity Income fund.’