What's going on?

US employment data out on Friday showed the world�s largest economy added more jobs than expected last month � but wage growth slowed.

What does this mean?

Hiring in the US remains strong. 263,000 new jobs were created in April, while unemployment sank to 3.6% � its lowest level since back in the winter of �69 (tweet this). Wage growth, however � often seen as a sign of consumer spending power � was stuck at 3.2%, slightly below expectations. And despite the positive headlines, a slight cooling of activity in the key US services sector may have combined with fresh suggestions of a forthcoming interest rate cut to drive down the value of the dollar.

Why should I care?

For markets: The Fed�s dilemma intensifies.

Despite the US economy�s slew of recent positive economic data, inflation � the rate at which the prices of goods and services rise � remains stubbornly low. Inflation data out on Monday showed that �core� inflation (which excludes food and energy prices) rose a mere 1.6% in March versus last year, barely more than slowpoke Europe and well below the American central bank�s 2% target. In theory, growing employment and wages should be accompanied by a pick-up in inflation, given that people have more money to spend � that would mean a rise in interest rates to stop inflation getting too high. But this hasn�t been the case � and the Federal Reserve is now coming under pressure to cut rates and potentially boost growth.


Zooming out: Don�t learn Japanese.

For central banks, maintaining steady economic growth alongside low unemployment and inflation is paramount � and interest rates are a key weapon in their arsenal. In Japan, years of quantitative easing have failed to boost growth and inflation. While Japanese interest rates have remained close to zero, the country�s central bank now owns half of all the Japanese government�s bonds. The US is only just shifting the last of the bonds it acquired following the last financial crisis; yet some notable teetotallers are now calling for a fresh round of buying.