Strong US jobs report clears path for Federal Reserve to hike rates in March

The US economy added more jobs than expected last month, official figures released on Friday (10 March) showed, paving the way for the Federal Reserve to hike interest rates this month.

According to the US government, the world's largest economy created 235,000 jobs in January, comfortably beating the 200,000 analysts expected, while January's gains were revised up from 227,000 to 238,000.

Meanwhile, the unemployment rate declined from 4.8% in January to 4.7% last month, in line with expectations and only marginally above December's nine-year low of 4.6%.

Hourly wages rose 0.2% to $26.09 in February, the first full month of Donald Trump's presidency, falling short of analysts' expectations for a 0.3% increase. However, the previous month's gain were revised upward from 0.1% to 0.2%.

Meanwhile, hourly pay increased 2.8% over 12 months, up from 2.6% in the prior month and just below the highest level recorded since the financial crisis.

"The data has rubber stamped the view that the job market is tight and it is becoming even more tighter," said Naeem Aslam, chief market analyst at Think Markets UK.

"The wage pressure was the key in today's data and it has gained most significant attention among other readings. The wage number released today was not really a blowout number but still a very decent one. Only if the number was extremely vile, then the Fed was going to stop their interest rate hike, but now it looks like that we are going to see a rate hike next week."

The report added the unseasonably warm weather resulted in 58,000 jobs being added in the construction sector, which followed a 40,000 gain in January, while the manufacturing industry added 28,000 jobs last month.

However, retailers shed 26,000 positions, although that came on the back of a strong gain in January, when the sector created 39,900 jobs.

"Today's US jobs report was more than adequate to justify a rate hike next week, assuming of course that the markets have correctly interpreted the Fed's very deliberate hawkish delivery over the last few weeks," added Craig Erlam, senior market analyst at Oanda.

"It's difficult to find anything to be down about in the jobs report, with job creation being well above the 12 month average and far exceeding what the Fed deems to be good enough."