Is Federal Reserve Really Heading Towards A Rate Hike?
Sep, 10th 05:34
The Fed’s comprehensive measure tracking the health of the US labour market improved for the fourth straight month in August.
The Labor Market Conditions Index rose to the highest level in eight months of 2.1 points last month from an upwardly revised 1.8 points in July, previously reported as 1.1 points.
The gauge rebounded this summer after decreasing to negative territory for the first time in three years in spring. Nevertheless, it is averaging 1.8 points over the past three months, which is markedly less than the nearly 4 points reported over the same period last year.
The data comes on heels of the government’s monthly employment report. The numbers showed the jobless rate fell to 5.1%, the lowest in seven years.
However, the increase in payrolls fell short of the market’s expectations, as nonfarm payrolls increased 173,000 last month since the manufacturing sector lost the most jobs since July 2013, following an upwardly revised 245,000 rise in July. Nevertheless, the numbers were still within the normal seasonal volatility associated with the start of the new school year.
Fed policy makers gather in Washington next week to weigh pros and cons of hiking interest rates for the first time in almost a decade. While the nation’s labour market continues to improve to warrant a hike, the inflation outlook remains cloudy and the global economy underperforms. Hence, analysts remain divided about the odds of September rate hike.