Weak Job Growth Took Wall Street by SurpriseOctober 7, 2015
U.S. employers have slowed hiring new workers over the last two months and wages fell in September.
The weak job growth took Wall Street by surprise. Payrolls outside of farming rose by 142,000 last month and August figures were revised sharply lower to show only 136,000 jobs added that month. Economists had expected job growth of 203,000 in September.
Federal Reserve (Fed) officials have been keeping a close eye on the jobs number for clues about when it would be appropriate to raise interest rates for the first time in more than nine years. The unemployment rate has been declining steadily, but that has come in significant part due to the lowest labor force participation rate in a generation.
Key takeaways this week:
- The news raises new doubts the economy is strong enough for the Fed to raise interest rates by the end of this year
- Until the Fed moves on raising rates, the market will continue to experience a higher than normal level of volatility
- Events happening in the rest of the world are affecting the U.S. economy
- Past performance is no guarantee of future results, and the opinions and other information in the investment commentary are as of October 7, 2015. This summary is intended to provide general information only and is reflective of the opinions of The Commerce Trust Company Investment Policy Committee. This material is not a recommendation of any particular security, is not based on any particular financial situation or needs, and is not intended to replace the advice of a qualified attorney, tax advisor or investment professional. Diversification does not guarantee a profit or protect against all risk. Commerce does not provide tax advice or legal advice to customers. Consult a tax specialist regarding tax implications related to any product and specific financial situations.
The government's jobs report last Friday was the weakest since December 2013, but in the long run it simply gives the Federal Reserve (Fed) more runway to work with in determining the timing of anticipated interest rate hikes.