By contrast, market-based forecasting tools, such as federal funds futures, imply a less-than 25 percent probability of the Fed hiking this month and just over 50 percent by December. If the Fed doesn’t raise rates after it meets September 20-21, most analysts expect it to do so in December.
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Employment in the US increased by less than anticipated in the month of August, according to a report released by the Labor Department on Friday.
But with resistance among other key Fed policymakers to a near-term rate hike strong, a September rate hike was already seen as unlikely before the jobs report.
Environment has been challenging for banks of Wall Street due to long stretched low interest rate policy since the financial crisis.
Still, a blowout report on Friday, with job gains above 200,000 and a solid increase in average hourly pay, could prompt the Fed to accelerate its timetable.
“This morning’s report is good but probably not good enough” to persuade the Fed to raise interest rates in September, said Carl Tannenbaum, chief economist at Northern Trust.
Chris Williamson, chief business economist at IHS Markit, said: “News the U.S. economy added jobs at a slower than expected rate in August, and that wage growth slowed, reduced the odds of a Fed rate hike in September”.
“We expect no rate hike this month, but things will be different by December”.
“Given the August payroll report’s tendency to underwhelm, the size of the miss likely had many breathing a sigh of relief”, he said.
Ms Curtin added: “The Fed also knows that investment growth and the associated productivity gains are crucial to businesses being able to grow wages”. Vice Chair Stanley Fischer suggested that the job market was close to full health, an assessment that typically might prompt a rate hike. In manufacturing, the workweek declined by two-tenths of an hour to 40.6 hours.
Factories cut payrolls by 14,000, the most in three months.
“The August jobs report shows the stagnant Clinton-Obama economy fails to deliver the jobs Americans desperately need”.
The labor force participation rate (the percentage of employable Americans who have or are looking for a job) remained at 62.8%.
Still, inflation remains far below the Fed’s target of 2 percent, potentially delaying higher rates.
The Dow Jones Industrial Average added 111.49 points, or 0.6 percent, to 18,530.79. Employment at construction companies fell for the fourth time in the last five months. The greenback fell 0.19% against the common currency to 0.8912 euro cents, but was broadly flat against the yen, exchanging hands at ¥103.25. Mining shed another 4,000 jobs and is now down by 223,000 jobs since the industry peak in September 2014.
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Government payrolls are forecast rising 2,000 in August, extending the streak of job gains in the public sector to four months.
