Better Than Expected Jobs Report Pressures Fed

The Commerce Department reported that the U.S. economy added 203,000 new jobs last month, which was better than expectations.  Also the unemployment rate fell to 7% from 7.2%.  While this is a positive report, and the jobs added were broad-based, spanning most industries across the economy, a 7% unemployment rate is still too high, and is below the target rate of 6.5% the Fed has set.  Still, this report does place more pressure on the Fed to step-up its start date for tapering-off its bond buying program.

The Fed will be watching the trend, rather than focusing on any one data-point.  Here is a chart of the employment results:

We can see that we have been hovering around the 200,000 level, but we do not see a positive uptrend developing.  Still, a prolonged period of consistent jobs creating is positive for the economy, and may be enough to spur the Fed to take action to slow their bond purchases sooner than expected.

 

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