USA shares edged higher and European shares rallied on Friday after weaker-than-expected United States jobs data gave the Federal Reserve more leeway to stand pat on interest rates, while the dollar gained and longer-dated Treasury yields also edged up.
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Now, the weaker-than-expected August jobs report “has done a disservice to the Fed’s “driving from the back seat” communication strategy”, Komileva said, observing that “outlier” jobs reports this year have provided no useful guide to the “remarkably and persistently resilient” us employment trend.
The unemployment rate was unchanged at 4.9 percent as more people flocked to the labor market. A broader measure of unemployment that includes discouraged and underemployed workers stands at 9.7 percent.
Of the 13 banks forecasting a rate rise this year, just three – Goldman Sachs, BNP Paribas and Societe General – see it occurring as early as this month.
Employers added a humdrum 151,000 jobs in August, slightly below expectations, while hourly earnings are up a disappointing 2.4% over the past 12 months.
In other news, the average workweek for all employees on private nonfarm payrolls decreased to 34.3 hours in August.
“The most important part [of the report] is the weakness in hours and wages”.
Goldman Sachs – September has a 55 percent chance of a rate hike, and there is an 80 percent probability for a rate increase later this year. Odds for a rate rise by the end of the year remained little changed at 55.2%. Others, including Evercore ISI’s Krishna Guha, suggested this month’s figures, which are traditionally weak and tend to be revised higher, will follow the same path of Augusts past, which has seen an average revision of 62,000 over the last five years.
An underwhelming jobs report pushed Wall Street higher Friday as investors seemed to think it would delay a rate hike from the Fed this month. That could ease any concerns caused by a weak August tally, though economists said a poor showing still would likely prompt the Fed to hold off on a rate hike.
“Over a third (of the August gains) are low-paying service jobs in sectors such as retail and restaurants that won’t support a family, pay for a home or put children through college”, said Trump senior economic advisor David Malpass.
The US central bank is also closely watching wage growth, which slowed in August, according to the latest figures. One of the banks said to benefit from an increase in interest rates was Bank of America (NYSE:BAC), and interest in the bank has without a doubt grown lately.
Though inflation has been running below the Fed’s target of 2 percent for several years, the unemployment rate is nearing – or may already be at – what many economists believe is its lowest sustainable level. The U.S. created 151,000 jobs in August, below consensus of 180,000 jobs.
Even though substantial labor market slack has been reduced, millions of Americans remain unemployed, a source of frustration that could weigh on the minds of some voters in the November presidential election.
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Last month, manufacturing sector employment was likely flat after rising for two straight months.
