US job growth slows in Sept; Fed hike un­cer­tain

US pay­rolls grow by 156,000 in Septem­ber

Kuwait Times - - BUSINESS -


US em­ploy­ment growth un­ex­pect­edly slowed for the third straight month in Septem­ber and the job­less rate rose, which could make the Fed­eral Re­serve more cau­tious about rais­ing in­ter­est rates. Non­farm pay­rolls rose 156,000, down from a gain of 167,000 jobs in Au­gust, the La­bor Depart­ment said yes­ter­day. Although the em­ploy­ment re­port sug­gested the US econ­omy was still ex­pand­ing, it was ex­pected to fur­ther re­duce the chance of a rate in­crease at the Fed’s Novem­ber pol­icy meet­ing. There is, how­ever, a much higher like­li­hood of a hike at the US cen­tral bank’s last meet­ing of the year in De­cem­ber.

“It’s strong enough that you’re not wor­ried about the US slip­ping” into an eco­nomic slump, said Michael Jones, an in­vest­ment of­fi­cer at River­Front In­vest­ment Group in Rich­mond, Vir­ginia. “But it’s not so strong that it pre­cip­i­tates im­me­di­ate ac­tion from the Fed.” US stock fu­tures moved sharply higher af­ter the pay­rolls re­port, while the dol­lar pared gains against a bas­ket of cur­ren­cies. Prices for US Trea­suries rose. Fed Chair Janet Yellen has said the econ­omy needs to cre­ate less than 100,000 jobs a month to keep up with pop­u­la­tion growth. Av­er­age monthly job gains have been about 180,000 this year, which Yellen has de­scribed as “un­sus­tain­able.”

Econ­o­mists polled by Reuters had ex­pected em­ploy­ers to add 175,000 jobs last month. The govern­ment said 7,000 fewer jobs were cre­ated in Au­gust and July than had been pre­vi­ously re­ported. The un­em­ploy­ment rate ticked up a tenth of a per­cent­age point to 5.0 per­cent in Septem­ber. The in­crease was driven by Amer­i­cans re­join­ing the la­bor force, which sug­gests slack re­mains in the job market. Hourly wages for pri­vate sec­tor work­ers rose 2.6 per­cent in Septem­ber from the same month a year ear­lier, in line with econ­o­mists’ ex­pec­ta­tions. The an­nual growth rate in hourly wages has shown signs of ac­cel­er­at­ing over the last year although it re­mains slower than be­fore the 2007-2009 re­ces­sion. Yes­ter­day’s em­ploy­ment re­port will be the last be­fore the Fed’s Nov. 1-2 pol­icy meet­ing. In­vestors see al­most no chance of a rate in­crease at that meet­ing given how close it is to the Nov 8 US pres­i­den­tial elec­tion.


Yellen said last month that the Fed will likely raise rates once this year, but prices on fed funds fu­tures sug­gest just above even odds the in­crease will come in De­cem­ber. Three Fed pol­i­cy­mak­ers voted for a hike last month when the cen­tral bank kept rates steady. How­ever, yes­ter­day’s data could boost the case of Fed pol­i­cy­mak­ers who have vo­cally de­fended a go-slow ap­proach to rate in­creases. Re­pub­li­can pres­i­den­tial can­di­date Don­ald Trump has ac­cused the Fed of play­ing pol­i­tics by hold­ing rates low, a charge Yellen and other Fed pol­i­cy­mak­ers have de­nied. Trump has also made re­vers­ing job losses at US fac­to­ries a cen­tral cam­paign prom­ise. Man­u­fac­tur­ing em­ploy­ment fell by 13,000 jobs in Septem­ber and the sec­tor has shed jobs in three of the last five months. At the same time, the job market on bal­ance continues to firm, even if at a slower pace, which could be an as­set for Demo­cratic pres­i­den­tial can­di­date Hil­lary Clin­ton. She has ar­gued that Demo­cratic Pres­i­dent Barack Obama’s poli­cies have helped the econ­omy cre­ate mil­lions of jobs. The Fed lifted its bench­mark overnight in­ter­est rate at the end of last year for the first time in nearly a decade, but has held it steady so far this year amid con­cerns over per­sis­tently low in­fla­tion. — Reuters

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