Eoin Treacy's view -
Payrolls climbed by 255,000 last month, exceeding all forecasts in a Bloomberg survey of 89 economists, following a 292,000 gain in June that was a bit larger than previously estimated, a Labor Department report showed Friday. The jobless rate held at 4.9 percent as many of the people streaming into the labor force found jobs.
The rate of hiring is more than enough to whittle away at the jobless rate over time and gradually eliminate labor-market slack, a goal of Federal Reserve officials who’ve kept interest rates low to spur growth. The strong employment readings, which propelled stocks toward a record, also come as the U.S. heads toward the presidential election, which could give Democrat Hillary Clinton a positive talking point.
“Labor demand is holding up pretty well,” said Jesse Edgerton, an economist at JPMorgan Chase & Co. in New York. “The labor market is firming up. Wages are starting to pick up. It’s a positive for consumer spending. This will reinforce the Fed’s view that improvement in the labor market is likely to continue.”
By taking swift action to force banks to write down non-performing loans, foreclose on underwater properties and raise capital requirements the USA ensured that the banking sector returned to some sense of normality within a few years of the financial crisis. By concurrently flooding the market with liquidity the Fed delivered higher asset prices which has helped banks rebuild their balance sheets. Very low interest rates and tight lending conditions might not be the best recipe for growth in bank profitability, but US banks are no longer the epicentre of risk in the global financial sector. That mantle has passed to the Eurozone banking sector.
This section continues in the Subscriber's Area. Back to top