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US jobs growth softens prospects for rate hike

London Stock ExchangeExpectations of a slowdown in America’s jobs juggernaut were confirmed with figures showing non-farm payrolls rose 155,000 in November against the 198,000 consensus forecast.

Markets were left to ponder the next move by policymakers as the shortage of workers is seen as a factor in the rate of job creation. It may cause the Federal Reserve to hesitate before raising interest rates.

The National Federation of Independent Businesses continues to report that the proportion of firms that can’t fill the vacancies remains at an all-time high. The rate of jobs growth has accelerated in 2018 to average 206,000 per month versus 182,000 in 2017, but it will slow next year, partly for this reason.

John Dolan, senior corporate dealer at Fexco Coporate Payments, said: “While a below par jobs report had been expected, the weakness of the data has hit hard and slammed the brakes on the greenback.

“November’s poor headline figure was worsened by two other red red flags – a sizeable downward revision to the October jobs number and weak wage growth.

“America’s job creation engine is no longer accelerating smoothly. And it’s becoming increasingly obvious that it is butting up against full employment.

“The unemployment rate has stubbornly refused to budge for three months in a row, which raises the question that if insufficient workers are available, where will future growth come from?

“Fears over the US economy’s growth prospects and the impact of the Trade War with China have palpably changed the mood music at the Federal Reserve.

“Unless the US economy recovers its mojo quickly, the pace of the Fed’s planned interest rate rises could be dialled down. 

“That concern has got dollar watchers worried, and the greenback is softening against the Euro as a result.”

Wall Street resumed sharp falls on the continuing uncertainty. In early trade The Dow Jones Industrial Average was down by more than 350 points.

The FTSE 100 opened 44 points higher and by mid-afternoon traded 145 points higher at 6850 as investors returned to the market following yesterday’s worldwide rout. However, it followed Wall Street to pare back gains and closed 74.06 points higher at 6778.11.

The blue chip index is still well down on its year closing high of 7,877 on 22 May.

It fell 217.79 points yesterday as markets slid over growing US-China tensions and concerns over Brexit and a global economic slowdown.

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