Fed's 'solid' growth view faces test as Greek drama unfolds

Sun Feb 1, 2015 4:09am EST
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By Philip Blenkinsop

BRUSSELS (Reuters) - The Federal Reserve's upgraded view that growth in the world's biggest economy is "solid", and so capable of withstanding an interest rate rise this year, will be put to the test by U.S. jobs data this week.

Ructions over Greece's new anti-austerity government will also continue to grip markets, and could overshadow economic data in the coming days.

The Federal Reserve last week lifted its assessment of the U.S. expansion to "solid" from "moderate", with jobs growth now seen as "strong".

A Reuters poll forecasts that U.S. employment data on Friday will show about 230,000 jobs were created in January, slowing slightly from 252,000 in December but still robust.

If confirmed it would be 12th consecutive month of payroll increases above 200,000, the longest such stretch since a 13-month run in 1994-95.

"Interest rates then were 6 percent. It simply isn't a zero percent environment at the moment," said Harm Bandholz, chief U.S. economist at UniCredit.

Weak wage growth has dented some of the optimism created by strong job creation.

Average wages fell 0.2 percent in December, the biggest decline in at least eight years, although some economists said that may have been a seasonal fluke, and the consensus is for a 0.3 percent increase in January.   Continued...

A detail from the front of the United States Federal Reserve Board building is shown in Washington October 28, 2014.  REUTERS/Gary Cameron