Friday’s U.S. non-farm payroll numbers were disappointing, coming in at only 160,000, 40,000 short of forecasts and slower than the more recent 200,000 plus level.
The likelihood of a Fed interest rate hike anytime soon seems to be fading and investors now await another key piece of data out at the end of the week--retail sales--for a clearer indication of a Fed decision.
Data from the Bureau of Labor Statistics showed that the pace of hiring employers decelerated in April to the slowest pace since September leaving the jobless rate unchanged at 5 per cent. Figures from February and March showed employment gains were 19,000 less than previously reported and that the labor force participation rate, which has been rising steadily, had decreased to 62.8 per cent from 63 per cent.
Hourly Pay Up
At the same time, pay growth showed an increase as employers lifted wages to attract and retain workers. Average hourly earnings for all employees were up by 8 cents to $25.53, 2.5 per cent higher since the start of the year.
Up until now, the main impetus behind the Federal Reserve’s decision to implement gradual increases in short-term interest rates was the country’s record private sector hiring streak. The latest hiring numbers seem to confirm policymakers’ conviction that the U.S. was at or close to full employment.
According Stuart Hoffman, chief economist at PNC Financial Services, “A rate hike delay until July or even September is warranted to give the FOMC more time to determine if there is a solid acceleration in real GDP growth, workers’ wages, and both faster headline . . . and core inflation this spring and summer.”