US Jobs Report Sparks Dilemma Over Next Interest Rate Hike
The US Federal Reserve faces a fresh dilemma over its next interest rate hike after September's jobs report showed weak hiring, contained wage gains, and weaker employment growth in the previous two months.
The economy added only 29,000 nonfarm jobs in September, falling short of economists' expectations of 90,000. The unemployment rate rose to 4.2% from 4.1% in August as more people entered the workforce and looked for jobs.
Olu Sonola, head of US economics at Fitch Ratings, said the report was 'a disappointing jobs report and a reminder that the low-hire, low-fire labor market never went away.' The slow job growth and higher unemployment rate give the Fed little reason to raise rates again in October.
The Federal Reserve raised its benchmark overnight interest rate by 25 basis points last month to a range of 3.75%-4.00%, and more increases were indicated as possible. However, with inflation still above the 2% target, another rate hike remains a possibility later this year, particularly in December.