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PR Newswire
06-04-2015, 10:25 AM
Jobs data makes even a September rate hike ‘iffy’
JUSTIN LAHART THE WALL STREET JOURNAL APRIL 06, 2015 12:00AM
Even a September hike ‘iffy’
A worker fixes the wiring above traffic lights in Long Beach, California, at the weekend. Source: AFP
The weekend jobs numbers made the Federal Reserve’s path over the next several months clearer. Just not in a good way.
The Labour Department reported that the economy added just 126,000 jobs in March, far fewer than the 247,000 economists were looking for and the smallest gain in more than a year.
Worse, downward revisions to January and February reduced America’s job count by 69,000. If there was any question that the Fed would pass up on raising rates at its June meeting, it has been resolved.
Indeed, amid signs that global economic weakness has begun to weigh on the US job market, even the September lift-off on rates that most economists have been forecasting is looking iffy.
The labour market’s weakness last month was concentrated in what are known as the goods-producing sectors: manufacturing, construction and mining and logging. These saw a loss of 13,000 jobs, marking the worst month since July 2013. Some of that may be attributable to the cold.
But the more worrisome exposure is to weakness abroad. Struggling economies overseas have helped send oil and other commodity prices lower and the dollar higher. Chances are the labour market will be able to handle these challenges. Low oil prices help America more than they hurt it and over time should add more jobs than they take away.
In the absence of the factors that weighed on it over the northern winter the economy should improve now in the spring. And that should give more impetus to hiring.
But the Fed will want to be sure. That is particularly the case when inflation is running well below its 2 per cent target. The big question now is whether the Fed will gain such confidence, and raise rates, by September. Fed funds futures contracts now put nearly even odds of it foregoing an increase at that meeting.
Even if a June rate rise is off the table, the market’s chronic state of uncertainty ahead of the Fed’s next move lingers. Whichever way the economic data breaks in the months ahead, somebody is going to get caught badly off-side.
JUSTIN LAHART THE WALL STREET JOURNAL APRIL 06, 2015 12:00AM
Even a September hike ‘iffy’
A worker fixes the wiring above traffic lights in Long Beach, California, at the weekend. Source: AFP
The weekend jobs numbers made the Federal Reserve’s path over the next several months clearer. Just not in a good way.
The Labour Department reported that the economy added just 126,000 jobs in March, far fewer than the 247,000 economists were looking for and the smallest gain in more than a year.
Worse, downward revisions to January and February reduced America’s job count by 69,000. If there was any question that the Fed would pass up on raising rates at its June meeting, it has been resolved.
Indeed, amid signs that global economic weakness has begun to weigh on the US job market, even the September lift-off on rates that most economists have been forecasting is looking iffy.
The labour market’s weakness last month was concentrated in what are known as the goods-producing sectors: manufacturing, construction and mining and logging. These saw a loss of 13,000 jobs, marking the worst month since July 2013. Some of that may be attributable to the cold.
But the more worrisome exposure is to weakness abroad. Struggling economies overseas have helped send oil and other commodity prices lower and the dollar higher. Chances are the labour market will be able to handle these challenges. Low oil prices help America more than they hurt it and over time should add more jobs than they take away.
In the absence of the factors that weighed on it over the northern winter the economy should improve now in the spring. And that should give more impetus to hiring.
But the Fed will want to be sure. That is particularly the case when inflation is running well below its 2 per cent target. The big question now is whether the Fed will gain such confidence, and raise rates, by September. Fed funds futures contracts now put nearly even odds of it foregoing an increase at that meeting.
Even if a June rate rise is off the table, the market’s chronic state of uncertainty ahead of the Fed’s next move lingers. Whichever way the economic data breaks in the months ahead, somebody is going to get caught badly off-side.