US jobs numbers come in high enough to prompt Fed rate hike

The BLS released the latest employment numbers for the US, the last piece of major economic data before the Fed meets next week to decide on whether to raise interest rates. The numbers were good enough. Payrolls were up 235,000, when 190,000 was expected. The unemployment rate came in at 4.7%. Average hourly earnings are now up 2.8% in the year to February. A rate hike is all but certain now.

The big takeaway: The job market is tight enough to provide little concern for the Fed in its tightening campaign now, despite lingering underemployment with the U-6 measure of unemployment at 9.2%. The real question now is whether GDP data for Q1 comes in low. Right now the Atlanta Fed GDPNow figure is showing only 1.2% growth for Q1, following 1.9% in Q4 2016 and 3.5% in the quarter before that. This decelerating trend could put the Fed in a holding pattern.