Weak US jobs report vindicates Fed caution

The Federal Reserve headquarters in Washington on Sept 16, 2015. PHOTO: REUTERS

WASHINGTON • Payrolls in the United States rose less than projected in September, wages stagnated and the jobless rate was unchanged as people left the workforce, signalling that the global slowdown and financial market turmoil are rippling through the world's largest economy.

The addition of 142,000 jobs followed a revised gain of 136,000 the prior month that was lower than estimated, a Labour Department report showed yesterday.

The jobless rate held at 5.1 per cent, and wage growth was unchanged.

The weak report vindicates the Federal Reserve's decision to delay an interest rate increase last month. Cooling overseas markets, a stronger dollar and lower oil prices that are hampering exports and manufacturing raise the risk that employers will hesitate before taking on more staff.

Employers added workers in industries including retail, education, and leisure and hospitality. Payroll estimates of 96 economists in the Bloomberg survey ranged from gains of 149,000 to 256,000 after a previously reported 173,000 advance for August.

The unemployment rate, which is derived from a separate Labour Department survey of households, was projected to hold at 5.1 per cent, the lowest since 2008, according to the survey median.

Revisions to prior reports cut a total of 59,000 jobs from payrolls in the previous two months. Private employment rose by 118,000 after a gain of 100,000 the prior month.

Government payrolls rose by 24,000. Employment at state and local agencies is often influenced at this time of the year by swings in the education sector related to the timing of the school year.

There may be some payback after the surge in local government education payrolls in recent months, Mr Ted Wieseman, an economist at Morgan Stanley, said in a note before the report.

Factory payrolls fell by 9,000. Manufacturing and mining have been hurt by the plunge in oil and commodities prices. Exports are also weakening amid a China-led slowdown in global growth.

The under-employment rate - which includes part-time workers who would prefer a full-time position and people who want to work but have given up looking - dropped to 10 per cent, the lowest since May 2008. The gap between the unemployment rate and the under-employment rate is one reason policymakers have said they will increase interest rates only gradually.

BLOOMBERG

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A version of this article appeared in the print edition of The Straits Times on October 03, 2015, with the headline Weak US jobs report vindicates Fed caution. Subscribe