US labour market and pay confound economic gloom

ROBUST US wage growth and falling unemployment suggest the world’s largest economy remained resilient in the wake of recent stock market tumoil last month.

Jobs creation slowed to 151,000 in January, lower than the expectations of 190,000, but it still helped push the unemployment rate down to an eight-year low of 4.9pc.

A strong US labour market has been one of the sole bright spots in an uncertain global economy. Bumper jobs growth and falling unemployment helped push the Federal Reserve into its first interest rate rise in nine years in December.

Wage growth also accelerated by 0.5pc on a monthly basis in January, while annual pay remained steady at 2.5pc.

A collapse in manufacturing and a slowdown in the dominant service sector had dampened the prospect of more monetary tightening, causing the dollar to fall 3pc this week – its sharpest decline in 20 years.

But the dollar edged higher by 0.6pc after the jobs report, as stocks in the US and Europe fell.

Analysts said the mixed picture would lead to the central bank retreating from a March rate hike.

Senior Fed officials have rowed back on their initial suggestion of raising interest rates four times this year.

New York Fed chief Bill Dudley said earlier this week that the market ructions had led to “considerably tighter” financial conditions since December, warning that any further rise in the dollar could have “significant consequences”.

Markets are pricing in just a 10pc probability of another 25-basis-point rate rise in March, but the chance of a hike by the summer months remains steady.