US job growth slows, easing pressure on Fed to hike rates before midterms
Por Cassandra Dumay — POLITICO – TOP Stories
U.S. employers added 29,000 jobs in September, a weaker-than-expected number that may take pressure off the Federal Reserve to raise interest rates later this month, just days before the midterm elections.
The Labor Department report released Friday signaled that the employment market isn’t as strong as some policymakers believed, with job growth estimates from the past two months revised downward and the unemployment rate notching up to 4.2%.
Perceptions of a solid job market helped build the case for the Fed’s decision last month to raise short-term borrowing costs for the first time in three years in a bid to fight inflation. Investors were pricing in a good chance of more rate hikes in the coming months, but Friday’s labor numbers — in addition to a key Commerce Department inflation index on Wednesday showing that price pressures beyond food and energy are cooling down — could head off the need for immediate central bank intervention.
President Donald Trump had criticized the Fed’s decision to raise rates and has called on the central bank to lower borrowing costs instead.
Fed Vice Chair Philip Jefferson suggested on Thursday that the Fed could afford to hold off on an interest rate increase for now, becoming the latest senior central bank official to lower expectations for a late October hike.
“I will continue to assess whether underlying trends suggest that inflation will return to target with sufficient speed,” Jefferson said in a speech at the University of Virginia, arguing that such a decision might take “more time.” “With more data in hand, such trends may lend themselves to better discernment, as may the appropriate stance of monetary policy.”
Economists polled by The Wall Street Journal had expected to see 84,000 jobs added in September, well below the 133,000 job surge in August — a number that was adjusted down Friday from a previous estimate of 162,000. The department’s labor count in July was also revised from 21,000 added positions to 10,000 jobs lost.
Still, employers added 11,000 construction jobs and 9,000 manufacturing jobs last month, according to the Labor Department count. Kevin Hassett, director of the White House National Economic Council, pointed to that growth as proof that Trump is delivering on his promise to bring factory jobs home from overseas.
“There are [more] people working building factories right now that weren’t doing that when President Trump took office,” Hassett said on Fox Business.
Nancy Vanden Houten, the lead U.S. economist at Oxford Economics, said before the report’s release that job growth is limited by the size of the workforce.
“For the labor market to be in balance, job growth should sort of match growth in the labor force,” Vanden Houten said. “The labor force is growing quite slowly — mainly because of the aging population, but also due to a sharp decline in immigration.”
Market expectations for rate increases dropped following the jobs report. KPMG Chief Economist Diane Swonk said the Fed will still be under pressure to tackle inflation from high energy costs, though she expects the central bank to wait until December to raise rates.
“The concern is not just the energy inflation in and of itself — it’s the persistence of inflation, and it’s building muscle memory. It’s easier for firms to think about just passing on those costs [to consumers] than it was in the past,” Swonk said. “There’s more inflation to come.”
Victoria Guida contributed to this report.
Fonte: POLITICO – TOP Stories
