The Australian dollar has jumped above the US82.00 cents level as wage growth in the US put into question the strength of the recovery in the US economy.
At 9am AEDT the local currency is trading at US82.06 cents, up from US81.40 cents on Friday.
The non-farm payrolls showed employment rose more than forecast adding 252,000 jobs in December bringing down the jobless rate to 5.6 percent, a Labor Department report showed.
But the job numbers were deceiving as wages rose only 1.7 % from a year ago, barely keeping up with inflation and well below analysts’ forecasts of 2.2% growth.
Emphasizing the Importance of wage growth in the US and just how important it is to the recovery of the US economy,Janus Capital Group’s Bill Gross who used to run the world’s biggest bond fund before joining Janus in September said in a radio interview “It’s about wages”
“The market is conflicted over what the Fed will do.’
Mentioning the problem of job creation and a falling unemployment rate coupled with wages that are below the Fed’s inflation target he noted,
‘‘We are creating a lot of jobs, part of it may be part-time. The creation of jobs is one thing, the creation of wages is another. Minus 0.2 percent in the month and a 1.7 percent annual hourly increase, just isn’t enough to sustain a U.S. economy.”
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