Employers across the country slammed the brakes on hiring over the last two months, raising new doubts the economy is strong enough for the Federal Reserve to raise interest rates by the end of this year.
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. That marked the smallest two-month gain in employment in over a year and could fuel fears that the China-led global economic slowdown is sapping America’s strength.
You can’t throw lipstick on this pig. The weak job growth took Wall Street by surprise and U.S. Stocks sold off Friday, while the dollar also weakened and yields of government bonds fell.
Bets on interest rate futures showed investors only saw a 30 percent chance of a Fed rate hike in December, down from under 50 percent before the job report’s release.
With a weak report here, in combination with some of the other weakness that we are seeing across the globe, the odds get dinged for a December interest rate hike.
Investors saw virtually no chance the Fed would end its near-zero interest rate policy at its only other scheduled meeting this year, to be held later in October. Futures prices indicated investors were betting the Fed would probably hike in March.
U.S. factories are feeling the global chill and shed 9,000 jobs in September after losing 18,000 in August, according to the Labor Department’s survey of employers.
We had seen events in China in the past few months lead to some global financial turmoil and you’re seeing it appear in the current the data.
New orders received by U.S. Factories fell 1.7 percent in August, the Commerce Department said in a separate report. .
This recovery continues to disappoint, but we can’t accept it as the new normal, yet! The recent pace of job growth should have been enough to push the unemployment rate lower because only around 100,000 new jobs are needed a month to keep up with population growth. But the jobless rate held steady at 5.1 per cent. The unemployment rate is derived from a separate survey of households that showed 350,000 workers dropping out of the labor force last month, as well as a lower level of employment.
The share of the population in the work force, which includes people who have jobs or are looking for one, fell to 62.4 per cent, the lowest level since 1977!
Average hourly wages fell by a cent to $25.09 (U.S.) during the month and were up only 2.2 per cent from the same month in 2014, holding around the same levels seen all year and pointing to marginal inflationary pressures.
The report did have a few bright spots that might be welcomed by Fed chief Janet Yellen, who said last week the economy was doing well enough to warrant higher rates this year.
The number of workers with part-time jobs, but who want more hours fell by 447,000 in September to 6.0 million.
Yellen has signaled that the elevated number of these workers points to hidden slack in the labor market that isn’t captured by the jobless rate. A measure of joblessness that includes these workers and is closely followed by the Fed fell to 10 percent, its lowest level since May 2008.
Economists polled had expected job growth of 203,000 in September.
All told, revised estimates meant 59,000 fewer jobs were created in July and August than previously believed.
In another grim sign, the number of hours worked in the country fell 0.2 per cent, raising the specter that some broader softness might have gripped the economy last month.
Some of the strongest headwinds in the U.S. economy comes from the commodity sector, which has slowed in part because of weaker demand from China.
The price of oil fell nearly 50 per cent over the last year, and U.S. Mining payrolls, which include energy sector jobs, fell by 10,000 in September, the ninth straight month of declines.
The American black community suffered more than most with a rate of 9.2 percent. The Bureau of Labor Statistics offered a summary:
Among the major worker groups, the unemployment rates for adult men (4.7 percent), adult women (4.6 percent), teenagers (16.3 percent), whites (4.4 percent), blacks (9.2 percent), Asians (3.6 percent), and Hispanics (6.4 percent) showed little or no change in September.
So, the black unemployment rate nearly doubled the white one. And the black community has not seen an improvement. The rate was 9.5 percent in August; it was 9.1 percent in July and 9.5 percent in June.
There are various explanations for the black unemployment problem. They range from poverty to incarceration rates and low education attainment. In many places, black Americans still live in areas segregated from whites. That means they do not have the same access to services that might favor white Americans. Whether all these theories are true, or just some of them, they stand as a reasonable set of circumstances for keeping black unemployment high, and that hurts us all, regardless of race.
While poverty rates for blacks have improved, they have done so less than for whites. So, the overall circumstances of problems for black Americans are self-fulfilling.
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