Take a Federal Reserve interest rate increase at the central bank’s September 21 meeting off the books.
Today, the Labor Department reported that the U.S. economy added only 151,000 net new jobs in August. Economists surveyed by Bloomberg had forecast the addition of 180,000 jobs.
The Labor Department also revised the June jobs number down to 171,000 from 292,000 but revised the July figure up to 275,000 from 255,000.
All this left the official unemployment rate unchanged at 4.9% and the labor force participation rate level at 62.8%.
A good part of the Fed’s argument for raising interest rates is that a job market near full employment would push up wages (and eventually inflation) and put the economy on a path toward faster growth. That argument took a hit in today’s number too the average workweek declined by 0.1 hour to 34.3 hours while average hourly wages rose 3 cents. That left incomes basically flat for August with July–not exactly the data that you want to see if you’re counting on consumer spending to lift the economy. For the year average hourly wages are up 2.4%. That’s down from the 2.7% rate of increase in the 12 months through July.
Odds for a September interest rate increase fell to 24% after the report, according to calculations from Bloomberg. That was down from 36% before the news. The futures market still sees a 56% chance of an interest rate increase before the end of 2016. Those odds were essentially unchanged from the 59% reading before today’s numbers.