‘Dreadful’ US job stats shred rate rise hopes

INTEREST rate rises could be delayed on both sides of the Atlantic after ‘dreadful’ jobs figures in the US, say experts.

The Labor Department said 142,000 jobs were created in the past month, far fewer than the 203,000 predicted by economists.

Revisions to the previous non-farm payroll report showed employment rose by 59,000 less than expected in July and August. The grim figures fuelled fears that the China-led global economic slowdown is hurting America and could force the Federal Reserve to leave rates on hold.

Any delay to rate hikes in the US could persuade the Bank of England to hold fire in the UK. That would be a boost to borrowers enjoying cheap mortgages but a blow to savers who have lost out since rates were slashed in 2009.

‘While it’s always important not to over-react to one data release, we’ll make an exception in this case,’ said Paul Ashworth, chief US economist at Capital Economics. ‘The chances of a rate hike by the Fed this year just went way down. The Fed won’t be raising rates until early 2016.’

Fed chairman Janet Yellen last week said the central bank would probably have to raise rates this year to stop the economy from overheating. But the jobs figures sent the dollar tumbling against currencies around the world as the prospects of a 2015 rate hike faded. At one point the pound was up more than a cent at $1.5237.

Christopher Vecchio, a currency analyst at DailyFX, said: ‘The report was disappointing all around, arguably the worst in recent memory. The dollar saw a precipitous decline across the board.’

Unemployment in the US held firm at 5.1pc last month – compared with 5.5pc in the UK and 11pc in the eurozone.

The share of the population in the workforce, which includes people who have jobs or are looking for one, fell to 62.4pc, the lowest level since 1977, while average hourly wages fell.

Rob Carnell, an economist at ING, described the figures as ‘uniformly dreadful’.

Andrew Goodwin, senior UK economist at Oxford Economics, said that he expects UK rates to rise in May but added that any delay by the Fed adds more global uncertainty.

‘Should these figures herald a slowdown in the US economy then this would point to the Bank delaying further,’ he said.