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The US economy added 275,000 jobs in February, beating expectations, but January’s strong number was sharply downgraded.

Non-farm payrolls figures published by the Bureau of Labor Statistics on Friday surpassed economists’ expectations of 200,000 new jobs.

But the BLS also downgraded the number for January from a blockbuster initial reading of 353,000 to 229,000.

It added that February’s unemployment rate rose to 3.9 per cent, compared with 3.7 per cent the month before.

Traders reacted to the scale of the January’s downgrade, with bond yields dipping and stocks ticking up. The futures market fully priced in a quarter-point interest rate cut for June, shifting forward expectations.

“The downward revisions to previous months’ gains leave recent growth looking less strong than previously thought,” said Capital Economics, a consultancy, in a note.

“Alongside the rise in the unemployment rate to a two-year high and a much weaker rise in wages, there is less reason now to be concerned that renewed labour market strength will drive inflation higher again,:

The two-year Treasury yield, which moves with interest rate expectations, dropped slightly, leaving it down 0.08 percentage points on the day at 4.43 per cent. 

S&P 500 futures rose slightly, up 0.1 per cent.  

On Thursday US Federal Reserve chair Jay Powell said the US central bank was “not far” from having the confidence to start lowering borrowing costs, as it awaited more concrete evidence inflation is on track to hit its 2 per cent target.

This is a developing story