Strong U.S. employment report brightens economic outlook

Last month’s strong jobs growth should reinforce the Fed’s confidence in a labor market that officials view as at or near full employment. Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth.

The U.S. central bank raised interest rates for the first rise in nearly a decade last December, but since then has held rates steady amid concerns over persistently low U.S. inflation and a global economic growth slowdown.

Given lingering global uncertainties and the upcoming U.S. presidential election, most economists expect another interest rate increase only in December, but financial markets are less sure.

After Friday’s data, Fed futures contracts were pricing in about a 46 percent chance of a rate hike by the end of this year, up from about 34 percent.

However, more top Wall Street banks now expect the Federal Reserve to raise U.S. interest rates in 2016 after Friday’s jobs report, a Reuters poll conducted on Friday showed.

Of 21 primary U.S. Treasury dealers who do business directly with the Fed, 13 said the U.S. central bank would raise its target interest rate by a quarter percentage point by the end of the year, compared with 8 of 15 primary dealers in a July 8 poll.http://www.reuters.com/article/us-usa-economy-idUSKCN10F1ET