Wall Street, Fed eye today's jobs report
After June’s sharp rebound in job gains after a May increase of only 11,000 new jobs, one Wall Street economist says the Federal Reserve will want to see “a string” of strong monthly job reports before pulling the trigger on an interest rate hike.
Wall Street is forecasting July job gains of 180,000, down from 287,000 in June, which marked a snapback from May’s dismal 11,000 new jobs. The unemployment rate is seen falling to 4.8% from 4.9%.
The latest jobs number is one of two key employment reports that will be released before the Fed’s next meeting in September.
But not even strong jobs data in both July and August will necessarily be enough to push the Fed off the sidelines next month and hike rates for the first time in 2016, says Tim Hopper, chief economist at TIAA Global Asset Management. “The July jobs report will be irrelevant for the September Fed meeting,” says Hopper. “Too much is going on domestically and internationally for the Fed to hike rates.”
There’s Brexit fallout, the Bank of England’s fresh stimulus efforts announced Thursday to avoid a bad Brexit outcome and U.S. growth slowing to a 1.2% pace last quarter.
Not even a strong 300,000 print on July jobs would change his rate-hike timetable, adds Hopper, although he says the market would start to speculate on a September hike.
“I would want to see a string of strong job reports to be convinced the economy is picking up,” he says, adding that December is the earliest the Fed will likely move.