US employers added 223,000 jobs last month, while the unemployment rate dropped to 5.4 percent, the lowest since May 2008. Employment is one of the most important pieces of data and the Federal Reserve is watching it closely. The positive figure has been interpreted as meaning that the Fed is on track to hike interest rates this year.
However, March figures were revised to only 85,000 jobs created, the lowest since June 2012. That resulted in 39,000 fewer jobs added in February and March than previously reported.
Average hourly earnings rose three cents last month, taking the annually gain to 2.2 percent. The wage increases are considered to be a boost for consumer spending, which is beneficial for the economy in general.
The economy stumbled in the first quarter and expanded by only a 0.2 percent year-on-year as it was exposed to bad weather conditions and port disruptions affecting trade, as well as a strong dollar. According to the trade deficit report announced earlier this week showed a wider-than-forecast figure, suggesting the economy actually shrank.
The US central bank has been watching the macroeconomic data closely and sounds keen to raise overnight interest rates, which it has kept near zero since December 2008. But the economy's recent softness has led investors to push back bets on the rate lift-off. Some believe the Fed could even wait until 2016 for the rate hike.
After the data showed the world’s biggest economy is creating jobs inline with the expectations, Wall Street stocks rallied and Treasury yields fell. At the opening bell S&P 500 increased 20 basis points to 2,108, while 10-year US Treasury yields are down 0.8 basis points to 2.11 percent.
The dollar gained 0.2 percent against the euro, however lost sharply against the British pound, which has been gaining value after the Conservative party won the elections, securing an absolute majority.