Last month, U.S. employment growth surprisingly slowed for the third consecutive month and the jobless rate increased, which could make the Fed more cautious about hiking interest rates. Nonfarm payrolls gained 156,000, down from a increase of 167,000 jobs in August, the Labor Department reported on Friday, while the unemployment rate edged higher a tenth of a percentage point to 5.0 percent as more Americans returned to the labor force. The data indicated the economy was stable, but not growing so quickly as to knock the Fed off its plan of increasing borrowing costs moderately.
“It’s an economy that is doing okay. It’s not necessarily accelerating, but it’s certainly doing okay,” stated Jonathan Lewis, chief investment officer at Fiera Capital.
At this pace, the job market continues to strengthen, which could be an asset for Democratic presidential candidate Hillary Clinton in the Nov. 8 U.S. election. She has debated that the Obama administration’s policies have assisted the economy create millions of jobs. U.S. stocks moved lower in early trading. The dollar dropped versus a basket of currencies, hinting traders were scaling back rate-hike bets. Rate futures, however, continued to direct to an hike at the Fed’s December policy meeting.
Fed Chair Janet Yellen has reported the economy needs to create less than 100,000 jobs a month to keep up with population growth. Average monthly job increases have been around 180,000 this year, which Yellen has labeled as “unsustainable.” A Poll from economists had projected employers to increase 175,000 jobs last month, with the jobless rate remaining steady. The government commented 7,000 fewer jobs were created in August and July than had been previously reported.
Hourly wages for private sector workers gained 2.6 percent last month from the same month a year earlier, on track with projections. Wage growth has shown signs of speeding up over the last year although it remains slower than before the 2007-2009 recession. The employment report will be the last prior to the Fed’s next policy meeting on Nov. 1-2. Investors see nearly zero percent chance of a rate increase at that meeting given how close it is to the election.