US Jobs Report Keeps September Hike on the Table

A very mixed jobs report from the US as job creation comes out in line with expectations at 223,000, but maybe below what people were hoping for after a slow first quarter and poor jobs report in March. Meanwhile, previous non-farm payroll numbers were revised lower, with March’s reading falling to 85,000. Unemployment fell to the lowest level in seven years while participation rose back to 62.8 offering some further upside to the report.

All things considered, the report is very mixed and doesn’t really change interest rate expectations. There was a little something for everyone, whether you’re dovish, hawkish or neutral and this has been reflected in the uncertain market response. The dollar initially fell against the euro before spiking by 100 pips. The pair quickly stabilised just above pre-release levels which offers support to the notion that little has changed.

For me, I remain optimistic that interest rates will raise this year, probably in September. Jobs growth in April was good, albeit not great, but unemployment fell further and therefore wage growth should follow soon. The first quarter was poor but the same was true last year and the rest of the year was great following a decent bounce in April. I remain confident that the country will make up for lost job creation and output in the first quarter, in the coming months and quarters and rates will rise this year.

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