To cap a week where economic data has painted a mixed picture of the U.S. economy, a widely anticipated report on the jobs market came in weaker than expected.
Government nonfarm payroll data showed that the world’s largest economy added 130,000 jobs in August, well below aBriefing.com consensus that had expected the addition of 171,000 jobs. The prior reading of 164,000 jobs added in July was revised lower, to 159,000.
The disappointing figures come after U.S. manufacturing data earlier in the week signaled that the sector was in contraction but other numbers pointed to a stronger-than-expected private-sector jobs market, better-than-forecast factory orders and service sector strength.
A silver lining to the jobs report and manufacturing data could be a bolstered case for the Fed to cut interest rates, but the stronger data makes the opposite argument. After the government jobs data this morning, the futures market odds for a Fed rate cut didn’t change all that much. The futures market showed a 93.5% probability of a 25-basis-point cut later in the month, compared with a 91.2% probability prior to the jobs report. The rest of the probability was for the Fed to stand pat on rates.
Equity index futures pared their gains after the jobs data, but investors seemed to maintain some of their optimism from news that China moved to stimulate its economy by lowering the amount of cash banks have to keep on hand as reserves. The step by the Chinese central bank comes amid slowing economic growth in the world’s second largest economy as the trade war with the United States drags on.
Later today, Fed Chairman Jerome Powell is scheduled to speak, and investors are likely to be tuned in for any comments on monetary policy.
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