Job
growth, Fed hike expected
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[October 02, 2015] By
Jason Lange
WASHINGTON (Reuters) - U.S. employers
likely added jobs at a brisk pace in September, a sign that the labor
market is near full strength and could push the Federal Reserve to raise
interest rates at one of its two remaining meetings this year.
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The Labor Department's monthly employment report, due on Friday at
8:30 a.m. EDT (1230 GMT), will almost certainly show the U.S.
economy is growing enough to push the jobless rate lower in the
coming months.
Economists surveyed by Reuters forecast U.S. payrolls outside of
farming rose by 203,000 last month, bouncing back from softer job
growth in August despite worries a China-led global economic
slowdown is sapping America's strength.
"The U.S. economy is alive and kicking," said Phil Lachowycz, an
economist at Fathom Consulting in London.
The jobless rate was expected to hold steady at 5.1 percent in
September because some workers who gave up jobs hunts in harder
times were expected to return to the labor force.
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But economists estimate that the economy currently only needs to add
about 100,000 jobs a month to keep up with population growth. This
is important because job creation above that level will push the
jobless rate lower over time and raise the risk of a surge in
inflation.
"We're still running well above that pace," said David Stockton, the
Fed's chief economist between 2000 and 2011. He expects the U.S.
central bank will raise rates in December.
WAGES SEEN RISING MODESTLY
In another sign of labor market tightening, Friday's report was
expected to show significant upward revisions to job growth in prior
months.
Still, inflation has remained subdued despite the jobless rate's
sharp drop over the last year and Fed Chair Janet Yellen has said
the Fed will hold off on rate hikes until it is quite confident that
inflation is going to pick up.
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Currently, the pace of inflation, at 0.3 percent in the year through
August, is well below the Fed's 2 percent target.
There is little sign of inflationary pressure in wages. Average
hourly earnings are expected to have increased just 0.2 percent last
month, slower that the 0.3 percent gain in August.
Employment gains in September are expected to have been concentrated
in service industries, in part because a China-led global economic
slowdown appears to be battering U.S. factories.
The manufacturing sector is expected to have added zero jobs last
month.
Construction sector payrolls, however, likely rose also thanks to a
strengthening housing market.
But more layoffs in the energy sector, which is grappling with a
nearly 50 percent drop in the price of oil over the last year, were
probably a drag on mining payrolls.
(Reporting by Jason Lange; Editing by Chizu Nomiyama)
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