Economists say long-awaited September jobs report complicates Fed rate cut path
Wall Street economists said last week’s release of the long-delayed September jobs report complicates the Fed’s progress as the central bank makes its next decision on interest rates in December.
“Hold or hold, there will likely be more than one naysayer,” JPMorgan chief U.S. economist Michael Feroli wrote in a research note Thursday. “We see this as a very close forecast, even closer than September of last year. Where we previously expected a cut next month, we now tend to see the Committee skip next month, but cuts will still come in January and May before being put on hold.”
September employment the report showed He said the U.S. economy added 119,000 jobs that month, according to Bloomberg data, easily beating economists’ forecasts of 51,000. However, summer employment data was revised downwards and the unemployment rate increased compared to August.
Stocks initially rose following Thursday’s news but ended the day lower. The Federal Open Market Committee (FOMC) is scheduled to announce its next policy decision on December 10.
Read more: How does the Fed interest rate decision affect your bank accounts, loans, credit cards and investments?
Comments Friday by John Williams, president of the Federal Reserve Bank of New York, suggested a rate cut is on the table in the near term. Williams said risks to employment have increased, but risks to inflation have decreased. The Fed has a dual mandate to ensure full employment and price stability.
“I view monetary policy as moderately restrictive, although slightly less restrictive than it was before our recent actions,” Williams said in a speech in Santiago, Chile. “Therefore, I still see room for further near-term adjustments to the target range of the federal funds rate to move the policy stance closer to the neutral range and thereby maintain the balance between achieving our two goals.”
Following comments made on Friday morning, placed markets The probability of a rate cut in December increased from 39% the previous day to 73%.
Economists noted that the September employment report was outdated due to the government shutdown, and although the number of headlines exceeded expectations, the fine print was not entirely positive.
Revisions to previous data showed the US economy lost 4,000 jobs in August, instead of the 22,000 increase previously reported. In July, 72,000 positions were added compared to the 79,000 positions previously reported.
The unemployment rate increased slightly to 4.4% from 4.3% in the previous month. The labor force participation rate increased from 62.3 percent to 62.4 percent.
