The softer-than-expected jobs report for September, released earlier today, rule out a 2015 rate increase by the Federal Reserve, analysts said Friday.
Only 142,000 jobs were added in September, well below initial forecasts of 200,000, and previous estimate of job gains in August and July were revised lower.
Brian Bethune, an economics professor at Tufts University, commented that “The business cycle has lost a lot of wind out of its sails, it is just not the time to start a tightening cycle.”
There is now a less than one-third chance of a rate hike in December, he added.
“I
think there is no question the Fed is going to have to re-huddle and
look at this number and come up with a new communications strategy”
because things are now being unveiled.
Gus Faucher, senior macroeconomist at PNC Bank, stuck with the same view.
Before the data, PNC had expected a December rate hike, but now this rules out October and "puts December in question."
“I think if job growth slows to 150,000 per month, the Fed may want to wait until sometime in 2016,” Faucher said adding that the regulator remains eager to reduce slack in the labor market.
Bethune said the U.S. economy had been doing well despite a disturbingly sluggish global environment.
However, business conditions appear to be buckling under the strain from low margins and the weak dollar, he added.
The key ISM manufacturing index dipped to neutral in September and could move into negative territory.
U.S. manufacturers have suffered a lot as the dollar is rising and other countries are pushing down their currencies seeking to “bootstrap” their economies, Bethune noted.
