Markets assess mixed messages from US jobs report

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There was mixed news for the Federal Reserve today as new data showed US job growth slowed more than expected in June, but wage growth and unemployment remained stubbornly high. The economy added 209,000 new nonfarm jobs, compared with a forecast of 225,000, the first time the report missed expectations in 15 months. However, hourly wage growth rose 4.4 percent, well above the roughly 3.5 percent rate that most economists believe is consistent with the 2 percent inflation target. percent from the Fed, while the unemployment rate only fell from 3.7 percent to 3.6 percent. You are viewing a snapshot of an interactive chart. This is most likely because you are offline or JavaScript is disabled in your browser.

Markets still expect the Fed to continue raising interest rates to reduce inflation, but the overall reaction was much calmer than yesterday, when buoyant private sector employment data sparked a global sell-off in stocks and Job Function Email Database bonds, which drove US borrowing costs to their highest level since 2007. Minutes from the Fed's latest policy meeting, released Wednesday, showed officials lining up behind additional rate hikes in light of the still-tight labor market and "upside risks" to inflation. The mood was reinforced by Fed policymaker Lorie Logan, who said yesterday that recent data "clearly quite hot" meant the central bank had to move on. “If we lose ground in our effort to restore price stability, we will have to do more to catch up,” she warned. “Labor market data is likely to become much more important than inflation data in the future.



The main question for central banks and markets would be when the economy starts to show reasonable signs of slowing down,” said one economist. How all this is affecting the mood of the American consumer is the subject of a new column from US editor-at-large Gillian Tett, who says optimism is fading even as news about jobs and inflation appears to be in largely positive and retail sales remain surprisingly resilient. One explanation is that the official data is incorrect or incomplete, he writes. Another is that the experience of consumers is worse than official data implies. Another is that mood surveys are misleading. Either way, she concludes, “those buyers are a bewildering tribe. So much for the United States being the land of optimism.” Need to know: UK and European economy UK house prices fell 2.6 per cent in June according to mortgage provider Halifax, the fastest annual fall since 2011. Markets now expect UK interest rates to reach 6.5 percent.