Unemployment rises to 4%, but rate rise expected

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Unemployment rises to 4%, but rate rise expected

The unemployment rate went up from 3.9% in December to 4%, but that was due to more people looking for work.

The US central bank is expected to raise interest rates next month because of the robust job creation, according to analysts.

The monthly survey also revised up its estimate for hiring in December, giving more support for those who claim that the economy will remain strong even as officials withdraw stimulus policies put in place at the beginning of the epidemic in 2020.

Brian Coulton, chief economist at Fitch Ratings, said this was a positive surprise. It shows that each successive wave of the virus is having a smaller and smaller impact on activity and labour demand. Federal Reserve chair Jerome Powell said the bank is eyeing a rate increase next month - which would be the first rise since 2018. The move is intended to help curb price increases by cooling demand with higher borrowing costs.

The central bank is under pressure to control inflation, which is rising at its fastest pace in nearly 40 years. The Bank of England has raised interest rates twice in the past three months in the UK.

The average hourly wage has gone up by 5.7% over the last 12 months - a big acceleration from the meagre gains seen in recent years, according to the latest jobs report. The jump does not keep pace with the fast pace of price increases hitting the economy.

There are signs that pay gains are helping to lure people back into the workforce. The share of people working or looking for work last month exceeded 62% for the first time since the Pandemic hit.

The report showed that Omicron still took a toll. There were almost double the number of people who said they did not work or saw their hours cut due to the pandemic - nearly double the number the previous month was.