A woman assembles a switch box at North American Aviation in 1942.
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The release of the August job data didn’t provide the much-needed direction to investors in bond, currency and equity markets.
Those favoring caution appeared to get a boost on Friday when a report showed 150,000 U.S. jobs were created last month, fewer than expected.
“We’re in a low-expectation environment and these numbers are still positive”, said Ellis Phifer, market strategist at Raymond James in Memphis, Tennessee, in reference to the U.S.jobs data.
The unemployment rate stood at 4.9% in August, which was higher than the 4.8% forecast by economists.
Average hourly earnings climbed at a 2.4% pace, which was a bit lighter than the 2.5% expected.
The ongoing net addition of jobs continues to be welcome news for the United States economy, which is now seven years removed from the global financial crisis.
He added, “On the other hand, an increasing number of Fed speakers have suggested that they are comfortable to hike rates despite relatively subdued employment growth meaning a December move should not be ruled out”.
Things were no different in the currency and bond markets, where benchmark 10-year notes got stuck in the narrowest trading range in nearly a decade in August.
James Knightley, an economist at ING, said uncertainty surrounding the November presidential election in the USA meant policymakers would delay rate rises until the start of 2017.
It comes after Federal Reserve chairman Janet Yellen last month signalled that USA interest rates could rise following a strong performance from the world’s largest economy. Last week, Fed Chair Janet Yellen said an improving labor market and signs that inflation are firming have strengthened the case for a rate hike, and most regional Fed bank presidents as well as Fed Vice Chair Stanley Fischer appear to back a rate hike sooner than later.
JPMorgan – December should still mark the timing of the next Fed rate hike, and the chance for a September rise is about 20 percent. This compares to 194,000 in July.
The ranks of the long-term unemployed remain at about 2 million, with one in four unemployed out of work for more than six months.
Lacker expressed his views after Fridays jobs report, which some have called disappointing.
Bulls cheered the fact that US payrolls grew at a slower but solid pace in August, which is consistent with a steady pace of economic improvement. The best estimate then is that full-time employment, which is unaffected by involuntary part-time and dual-job holders, is essentially unchanged in August. Employment continued to trend up in several service-providing industries, but retail employment was little changed, according to the report.
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The headline ISM manufacturing index fell to 49.4 in August from 52.6 in July. With the data falling short, that could mean the Fed waits a few more months.
