The latest report showed U.S. job growth rose more than expected in April. This marks a strong economic fundamentals despite a contraction in gross domestic product (GDP) in the first quarter.
NFP readings were reported to have increased by 428,000 jobs last month based on a report released by the Department of Labor just now. March data was revised slightly lower showing 428,000 jobs added instead of 431,000 as previously reported.
Economists as in a Reuter survey NFP readings increased by 391,000 jobs. At the same time, the unemployment rate remained unchanged at 3.6%.
According to Lou Crandall, ICAP’s Wrightson chief economist thinks that it is ambiguous whether greater job growth gains will be a cause for concern for the Fed or a relief.
He further said that stronger growth reflects the willingness of individuals to return to work tends to curb labor costs while higher wage offers will squeeze employers.
The Fed has reacted by tightening monetary policy to lower inflation by doubling interest rates. The Fed on Thursday raised its policy interest rate by half a percentage point, the biggest increase in 22 years and the Fed stressed it will start reducing its bond holdings next month.
The increase in jobs last month underscored a strong economic fundamentals despite declining production in the first quarter impacted by the trade deficit.
Average hourly earnings rose 0.3% after rising 0.5% in March. Compensation for American workers recorded its biggest increase in more than three decades in the first quarter, helping to keep domestic demand supported.
Finally, Powell on Thursday noted a 75 basis-point rate hike was not on the schedule but some economists believe the Fed could raise its benchmark interest rate above its neutral rate, estimated at between 2-3%.
