There were 151,000 jobsadded to the United States economy in August, below economists’ forecasts for 180,000 and a marked slowdown after two bumper months of growth.
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Some economists and investors believe a rate hike could happen when the Fed meets later this month, though most see the December meeting as the most likely time for a hike this year. But the Fed chair, Janet Yellen, has also said she and fellow policymakers would watch the economic data closely. Low rates are meant to encourage businesses to borrow and invest, but Fed policymakers are now split between those who worry that reducing the economic stimulus by lifting rates would damage growth and jobs and those who fear that waiting could allow inflation to take hold.
Some analysts continue to expect the Fed to raise rates this month, including economist Jan Hatzius at Goldman Sachs who said the August job gains are “just enough” to be convincing.
Stocks and bonds rallied sharply immediately after the report.
The mining-heavy FTSE 100 gained 2.2% – or £38bn in market value – to close the day just shy of the 6,900 barrier. Revisions showed USA employers added 1,000 fewer jobs in June and July than previously estimated.
If you follow bank stocks, or are invested in them, you know that the reason for the underwhelming pace of price appreciation in bank stocks is the result of the Federal Reserve’s overly restrictive interest rate policy. This is mixed news because these jobs tend to come with lower pay, few benefits and less stability. Policymakers have also highlighted worries about the global outlook and the possible repercussions of the United Kingdom vote to leave the EU. On Friday, Sept. 2, 2016, the US government issues the August jobs report. Meanwhile, commodity-sensitive shares in the materials and industrials sectors rose 0.8% and 0.4%, respectively.
Nonfarm payrolls rose by a seasonally adjusted 151,000 last month, the Labor Department said Friday.
Separately, the Labor Department also said that average hourly wages, which have climbed 2.4 percent over the past 12 months, inched up a weaker-than-expected 0.1 percent, or $0.03, in August to $25.73. The August gain was smaller than economists had expected.
Although employment in food services (+34,000) and financial activities (+15,000) increased, employment in retail trade, warehousing and manufacturing didn’t change much in August.
The report once again highlighted the racial disparity in the jobs market. The unemployment rate held firm at 4.9%. “It appears that the funds rate should be significantly higher than it is now”, Richmond Fed President Jeffrey Lacker, a consistent advocate for a rate hike even when the unemployment was higher than its current 4.9 percent, said Friday.
The dollar weakened initially before reversing to be higher against most major currencies in late NY trading.
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The latest data is the last broad measure of the labor market Federal Reserve officials will see before meeting on September 20-21.
