WASHINGTON (Reuters) - U.S. job growth rebounded strongly in June, with government payrolls surging, but persistent moderate wage gains and mounting evidence the economy was losing momentum could still encourage the Federal Reserve to cut interest rates this month. The Labor Department’s closely watched employment report on Friday suggested May’s sharp slowdown in hiring was probably a fluke. Lack of concrete progress in resolving an acrimonious trade war between the United States and China, however, means the bar could be very high for the Fed not to lower borrowing costs at its July 30-31 policy meeting. But the strong pace of job gains reduced the chances of a half percentage point rate cut at the end of the month. The U.S. central bank in June signaled it could ease monetary policy as early as this month citing low inflation and growing risks to the economy from an escalation in trade tensions between Washington and Beijing. “We think the Fed is still on … [Read more...] about U.S. job growth surges, July rate cut expectations intact
Rate cut appropriate if jobless rate rises
(Reuters) - 1/THE FIRST CUT... Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 5, 2019. REUTERS/Brendan McDermid With President Donald Trump’s trade policies heightening fears of a U.S. recession, expectations of a Fed rate cut have dramatically increased in the past month. Money market pricing became even more aggressive after Federal Reserve Chair Jerome Powell threw open the door to a cut, promising on June 4 the Fed would act “as appropriate” to address risks from the trade dispute. It was the second sudden shift in the Fed’s tone, after January when it abandoned its bias toward steady tightening. So when would it be appropriate for the Fed to act? The Federal Open Market Committee might answer that question at its June 18-19 meeting. Money markets price a cut by July; by end-2019 they reckon the Fed will have cut twice at least. The CME Group’s FedWatch tool shows traders assign an 88% probability of … [Read more...] about Take Five: The Fed and the rest
THE SECOND volume of “My Struggle”, Karl Ove Knausgaard’s enormous, maddening, brilliant autobiographical novels, contains some depressing life advice. “If I have learned one thing,” he sighs, “it is the following: don’t believe you are anybody. Don’t bloody believe you are somebody…Do not believe that you’re anything special. Do not believe that you’re worth anything, because you aren’t.” We like to tell ourselves that we deserve our successes, Mr Knausgaard’s book suggests, yet they are largely the product of forces over which we have no control. When he wrote those words he probably was not thinking about the boasts of politicians in the OECD, a club mainly of rich countries, about their jobs markets. But he might as well have been. “Unemployment numbers best in 51 years. Wow!” tweeted Donald Trump, America’s president, last month. Theresa May, the British prime minister, … [Read more...] about Across the rich world, an extraordinary jobs boom is under way
An editorial written by a Federal Reserve of Minneapolis president in The Wall Street Journal suggested the unemployment rate is no longer a great indicator of the economy. Neel Kashkari wrote that an issue was wage growth has only increased modestly and the rate only shows people who are looking for work — not those who simply stopped looking. He uses the example of prime working age Americans (25 to 54 years old) not in the labor force going down. Question: Is the unemployment rate still a good indicator of the economy? (Yes or No) Phil Blair, Manpower YES: The unemployment rate is reasonably accurate and it is understood and followed by most people. We are mostly looking for trends rather than exact numbers by month. It is complicated to understand the variance when a large number of jobs are created, but unemployment goes up. We are concerned about the ratio of people looking for work to the number of jobs. If they are not actively looking for jobs then we don’t care … [Read more...] about Econometer: Is the unemployment rate still a good indicator?
Declining house prices in Sydney and Melbourne should not come as a surprise and are not all bad news, the Reserve Bank governor, Philip Lowe, has told a parliamentary committee hearing in Sydney. Lowe stressed that cooling prices, while making things “difficult for some in our community”, are not expected to derail Australia’s economy. “It will put our housing markets on more sustainable footings and allow more people to purchase their own home. So there is a positive side too,” he said on Friday. Lowe also said he doesn’t see a strong case to change monetary policy in the near term, despite a number of retail banks factoring in the prospect of at least one interest rate cut this year. Westpac’s chief economist, Bill Evans, said on Thursday the Reserve Bank would be forced to make two cuts in interest rates this year as falling house prices create a “negative wealth effect” and drag down the whole economy. But Lowe says the labour … [Read more...] about House price falls in Sydney and Melbourne not all bad, Reserve Bank head says