Why so few are anxious about likely Fed rate hike this week

Randall Kroszner, a former Federal Reserve Board governor, told AFP that with the economy beginning to hum, Fed Chair Janet Yellen was "certainly open" to the possibility of raising rates more quickly.

The manufacturing sector saw solid gains last month, according to the BLS and ADP.

Economists say the very warm winter helped boost job because it has allowed construction and other outdoor work to continue without the usual hold ups caused by winter storms.

A strong US February jobs report on last Friday appears to have cemented the likelihood of a Federal Reserve rate hike this week. As we note in our Morning MoneyBeat newsletter, even if the employment data underwhelms, that's unlikely to change much. U.S. stock index futures were trading higher, while the dollar was weaker against a basket of currencies. Average hourly earnings rose by 2.8% year-on-year in January and February. That lifted the year-on-year increase in wages to 2.8 per cent from 2.6 per cent in January.

And in another sign that jobs markets are tightening, the already low unemployment rate fell a tenth of a point to 4.7 percent, leaving the unemployed population at 7.5 million.

Economists had expected employment to climb by about 195,000 jobs compared to the addition of 227,000 jobs originally reported for the previous month. Nonfarm payrolls increased 235,000 from January, and the unemployment rate declined slightly, to 4.7 percent.

Average weekly earnings stood at $897.50, up 2.5 percent over February of past year. "We're starting to see workers have some market power".

Expect the wage growth to continue to accelerate, Gad Levanon, chief economist for North America at The Conference Board, a global business group based in NY, told the Monitor.

Even with the expected increase in short-term rates, few economists expect yields to approach the levels that they attained when I was involved in the fixed-income markets.

The Fed is also expected to increase rates because the central bank signaled it. Yellen's speech on March 3 started the possibility that the Fed would commit to its December projections of three interest rates in 2017. The US expansion is sturdier and more broadly based than it has been for a decade. While Trump's victory last November sparked a stock market rally and jumps in consumer and business confidence, there has been no surge in either business or consumer spending.

Medalla predicted either a 1-rate hike, or 2-rate hike scenarios for the year, of 25-basis points each, although he said the Fed will still be data-dependent. For example, the U-6 unemployment rate is less encouraging.

And too many prime-age workers remain outside the labor force and too many part-time workers were struggling to find full-time employment, she added.

As has been reported in large part related to theoutcome of the USA presidential election, we know the job market has distributional issues, with some regions and sectors thriving while others struggle.

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