UPDATE 2-Fed's Dudley stays upbeat, says US labor market improving
(Adds context on split within Fed, unemployment claims)
By Jonathan Spicer and Stephanie Kelly
NEW YORK Aug 18 (Reuters) - Strong employment and a long-awaited return of middle-wage jobs suggest the labor market is tightening and the broader U.S. economy is on track, an influential Federal Reserve policymaker said on Thursday, appearing to reinforce his more confident message on a possible interest-rate hike.
New York Fed President William Dudley, a permanent voter on U.S. interest-rate policy and a close ally of Fed Chair Janet Yellen, said the last two months of employment "helped allay concerns that arose earlier this year that job growth was beginning to stall (and) reinforced my view that labor market conditions continue to improve."
While Dudley had some cautionary words on Puerto Rico's struggling economy, he painted a relatively bright picture of the national labor market that prompted investors to send Treasury yields somewhat lower and, briefly, to boost the dollar.
The comments come as investors struggle to parse mixed messages on whether a rate hike is imminent. Minutes from the Fed's July policy meeting show Dudley's colleagues are torn between hiking soon based on labor market strength, or waiting until inflation is more evident.
Earlier this week, Dudley said rates could possibly rise as soon as September, depending on the economic data and signs of inflation.
"The labor market continues to tighten," he said on Thursday, citing evidence of wage gains in the employment cost index and in average hourly earnings, two key pieces of data. The roughly 2.5 percent growth in wages "suggests we are getting closer to full employment."
In another sign of labor resilience, data on Thursday showed the number of Americans filing for unemployment benefits dropped more than expected last week. Continuación...