US employment increased strongly last month, underscoring the economy’s resilience, but an influx of people into the labor market could temper nascent wage growth and keep the US Federal Reserve cautious about further interest rate increases.
Nonfarm payrolls rose by 215,000 last month and the unemployment rate edged up to 5 percent from an eight-year low of 4.9 percent, the US Department of Labor said on Friday.
The jobless rate increased as more people continued to enter or re-enter the labor market, a sign of confidence in the job market.
Average hourly earnings gained US$0.07 after slipping in February.
Economists see a limited impact on monetary policy in the near-term from the strong jobs report, as the growing number of people entering the labor market supported Fed Chair Janet Yellen’s view that hidden slack remained in the jobs market.
“This is an ideal situation for the Fed. The strong pace of job growth is being offset by the increase in entrants into the labor force, which will reduce any concerns about labor market tightness fostering outsized wage inflation,” TD Securities deputy chief economist Millan Mulraine said in New York.
The Fed also appears to be more focused on international developments. Yellen last week said that slowing world growth and lower oil prices posed a downside risk to the US economic outlook, adding that she considered it appropriate for policymakers to “proceed cautiously in adjusting policy.”
Financial markets see a 27 percent chance of a hike at the Fed’s June policy meeting, a 52 percent chance of such a move in September and a 65 percent probability at the December meeting, according to CME FedWatch.
Other data released on Friday showed manufacturing activity expanded last month for the first time in six months as new orders surged, suggesting the worst of the factory rout was over.
The Institute for Supply Management said its index of national factory activity rose 2.3 points to a reading of 51.8 last month.
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