US dollar gains ground on non-farm payrolls data

US dollar gains ground on non-farm payrolls data

The US dollar gained strength following the release of monthly US non-farm payrolls data, Friday. The report showed payrolls rose, although earnings growth disappointed.

By 1425 BST, the US dollar continued to weigh on the British pound, with cable trading at $1.3415, down from $1.3457 around midday. The pair had moved as low as $1.3400 in the immediate aftermath of the release.

Non-farm payrolls

The US Bureau of Labour Statistics (BLS), reported Friday that the number of US citizens in employment – or the number of non-farm payrolls – rose by 228,000 in November. That was above expectations and beat October’s revised 244,000 increase.

That gain meant the US unemployment rate held steady at 4.1%. The unemployment rate is 0.5% lower than a year earlier. Meanwhile, the release also showed there were 799,000 fewer unemployed persons in November than the same month in 2016.

“Employment continued to trend up in professional and business services, manufacturing, and health care,” the BLS data summary read. “Employment growth has averaged 174,000 per month thus far this year, compared with an average monthly gain of 187,000 in 2016.”

However, while the news on employment growth was positive, earnings data was less so.

Earnings growth edged up 0.2% on the month and by 2.5% on the year. The annual gain was below market expectations of a 2.7% increase. It appears to be this detail that is likely limiting the US dollar upside.

Data remain supportive of Dec Fed rate hike

Despite the slight disappointment on slower than anticipated earnings growth, the data continue to support the view that the US Federal Reserve Bank will raise interest rates when it meets next week.

“Not that it was a hurdle to raising rates next week, but the Fed will feel very comfortable with this kind of a jobs report,” said Ward McCarthy, chief financial economist at Jefferies LLC, according to a Bloomberg report.

By Ilona Billington
Ilona is a freelance writer and editor with over 15 years experience reporting and writing about UK and European economics, real estate, financial markets and central banks.

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