The unemployment rate held steady at a historically low 4.9 percent.
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August’s jobs gains could still be ample to make the Fed hike interest rates in December, nonetheless. The measure stood at 24 per cent before the jobs report was released.
“It would lead people to the conclusion that the economy is continuing to grow at a moderate pace and to expect a December rate hike from the Fed rather than September”, said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management in Washington.
Lacker, who is not a voting member of the United States central bank’s rate-setting committee this year, said he still favors raising rates sooner than later and that the Fed’s last policy meeting in July would have been a “good time” to tighten policy. That probability rises to 63 percent by year end.
“I don’t think this is the kind of report that the Fed wanted to see ahead of a hike in September, the contours are just too squishy”. Stocks have been solidly higher today. At the same time the jobs report landed, however, we learned that factory orders for July posted their biggest gain since October.
With the labour market near full employment, a slowdown in job growth is normal.
Yet the August job figures may lead the Fed to hold off at its next meeting, September 20-21, and await further economic data.
The payrolls data were contending with a pattern of August disappointment, with the survey median overshooting the first print for the month in each of the last five years, by an average 47,000.
“Overall, it still looks like the job market is doing well”, said Michael Feroli, chief USA economist at JPMorgan Securities LLC in NY, who projected a 150,000 gain in payrolls.
When the Fed hiked rates in December 2015, Yellen told Congress right before the move that the FOMC could decide to raise rates at the December meeting, depending on the data.
He also stated that the economy will need even higher interest rates, unless jobs growth slows considerably. Average hourly wages barely rose in August and has increased just 2.4 percent over the past 12 months.
The moderation in gains, which reflects a calendar quirk, pulled down the year-on-year gain to 2.4 percent from an upwardly revised 2.7 percent in July, which was the largest rise in seven years. And monthly payroll growth has averaged a solid 230,000 over the past three months, suggesting room exists for a rate hike this month. The labor-force participation rate held steady at 62.8 percent after April and May wiped out gains from earlier this year. Mortgage rates remain at historically low levels, however.
Still, inflation remains far below the Fed’s target of 2 percent, potentially delaying higher rates.
United States nonfarm employment climbed by 151,000 last month, compared with a median forecast of 180,000 in a Bloomberg survey.
There are some troubling signs in this month’s report, including the lack of growth in manufacturing and construction jobs and unacceptably slow wage growth.
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Professional and business services added 22,000 jobs last month after creating 80,000 positions in July.
