US jobs sector gains, Midwest manufacturing stumbles

30 Sep 2015 | Author: | No comments yet »

ADP Report Shows Job Growth Decelerating.

U.S. companies hired workers at a solid clip in September, but data showed factory activity in the U.S. Shaking off financial market turmoil, U.S. companies accelerated their hiring in September and added 200,000 net new jobs, payroll firm Automatic Data Processing said Wednesday. September job growth will be a major factor in the decision by Federal Reserve policymakers whether to raise a key interest rate for the first time in nearly a decade. Economists use ADP’s data to get a sense of how many new jobs the government’s official employment will report show, but the two job surveys don’t always line up from month to month.

The U.S. central bank’s policy-setting group, the Federal Open Market Committee (FOMC), decided against ending its near zero interest rate policy in September, citing concerns about global risks and market turbulence stemming from China. Fed officials opted to hold the so-called federal fund rate at near 0% after their September meeting to allow for more time to assess whether the recent turmoil in financial markets had harmed the U.S. economy. In recent days, several top Fed policy-makers including Chair Janet Yellen have said the Fed could raise rates later this year if the economy shows further improvement. “As for the FOMC reacting to this report, the market can continue to view them as the suitor wondering why it should matter when he gives the engagement ring as long as she knows they are eventually going to be married,” Steve Blitz, chief economist at ITG in New York.

Interest rates futures implied traders see a 11 per cent chance the Fed would raise rates in October and a 39 per cent chance it would do so in December, according to CME Group’s FedWatch program. The low cost of oil has also forced energy producers to slim down. “Despite job losses in the energy and manufacturing industries, the economy is creating close to 200,000 jobs per month, “ said Mark Zandi, chief economist of Moody’s Analytics, which prepares the report using ADP’s data. “At this pace full employment is fast approaching.” Moody’s prepares the ADP report using the payroll company’s data. Job openings are at an all-time high, consumer confidence is at a postrecession high and Americans have even increased spending a bit recently, particularly on new cars and trucks. Economists polled by Reuters expect Friday’s report to show U.S. employers hired 203,000 workers in September, improving from August’s 173,000 increase which was the smallest in five months. Even with an unofficial unemployment rate of 5.1%, however, more than 16 million Americans who say they want a full-time job still can’t find one, an unusually high number so deep into an economic recovery.

The unemployment rate was forecast to hold at 5.1 per cent, a near 7-1/2 year low. “If we are able to hold on this type of jobs growth, the odds are pretty good we’d be back to full employment in the summer of 2016,” Moody’s Analytics chief economist Mark Zandi told reporters on a conference call. U.S. stocks rose partly on the better-than-expected ADP data, while Treasuries prices stayed in negative territory and the dollar tacked on earlier gains.

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