US hiring slows to 151K jobs in August; Fed hike less likely

“This is a healthy thing if the (job) gains slow down a little bit, because that reduces the risk that the Fed will quickly raise rates and choke off the expansion”, said Josh Wright, chief economist at iCIMS, a recruitment software company and former Fed staffer.

Today’s jobs report marks 71 consecutive months of job growth for the USA economy.

The Labor Department will publish the August jobs report at 8:30 a.m. ET. “That slammed the door on September [rate-hike chances]”, Dan North, Euler Hermes North America’s chief economist, said. The rise in payrolls reinforces views that the economy has regained speed after nearly stalling in the first half of the year. Meanwhile, the labor force participation rate remained stable at 62.8%, as did the jobless rate at 4.9%, though it was expected to tick slightly lower to 4.8% for the month.

Joel Naroff of Naroff Economic Advisors disagreed: “If Janet Yellen and her merry band of terrified rate hikers wanted a strong jobs report to give them cover to raise rates in September, they didn’t get it”, he wrote in a note to clients.

The dollar was marginally higher against a basket of currencies.

The department revised the nation’s June jobs gain down from 292,000 to 271,000 and revised its July increase upward from 255,000 to 275,000, leaving the total for both months 1,000 less than previously reported.

And Fed officials have long said they expect job gains to slow as the USA economy nears full employment.

The nation as a whole added 151,000 jobs in August, with a 4.9 percent unemployment rate. Vice Chair Stanley Fischer suggested that the job market was close to full health, an assessment that typically might prompt a rate hike.

Several economists noted Friday that the August payroll figure often comes in below forecasts and then is revised up in subsequent months.

“There were no positive standouts here, the key underlying data were all pretty soft as well”, said Tom Porcelli, chief US economist at RBC Capital Markets in NY. Futures prices signaled a reduced probability of a Fed rate hike this month.

Republican presidential nominee Donald Trump’s campaign team said the numbers were a sign of a disappointing economic performance tied to what a senior campaign adviser called “Clinton globalist policies”.

The timing of the next rate hike could also be determined by wage growth. The average work week for all workers decreased by 6 minutes to 34.3 hours in July. But far from being at outlier, last month’s unemployment figures are much in line with a years-long trend of unemployment figures consistently charting new lows. Economists see growth picking up to 2.7 per cent in the third quarter, according to Bloomberg survey estimates.

The Standard & Poor’s 500 gained 9 points, or 0.4 percent, to 2,179. And given that inflation is running below the Fed’s 2% target at 1.6%, some in the Fed, including Board of Governors member Jerome Powell, consider a cautious approach appropriate.

The inconclusive August jobs report might not provide the Federal Reserve with the impetus it needs to take interest rates higher in the near future. Mylan stock has dropped 18 percent in the last two weeks as the company has been criticized for repeatedly raising the price of its EpiPen allergy injection.

Temporary-help jobs, a harbinger of future hiring, fell 3,100.