InvestmentsSep 5 2014

US jobs data fall short of expectations

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The final US jobs report before the Federal Reserve’s key meeting this month has fallen far short of expectations.

America’s economy created 142,000 jobs in August compared with 209,000 in July, the Department of Labor said on Friday. Economists had forecast 230,000.

The unemployment rate fell to 6.1 per cent last month from 6.2 per cent in July.

Since its surprise contraction in the first quarter of the year, the world’s largest economy has regained momentum.

Growth rebounded in the second-quarter to 4.2 per cent, and this week delivered encouraging reports on the services and manufacturing sector.

Surveys show that consumer confidence has returned to levels last seen before the financial crisis.

All of which is intensifying interest in the meeting of the Fed’s Open Market Committee on September 16-17, when economists expect chairwoman Janet Yellen to provide more detail on when the central bank will raise interest rates for the first time since the financial crisis.

Fed officials have said they will wrap up the taper of the central bank’s trillion dollar quantitative easing plan in October.

A few minutes after the release of the report from the dollar weakened against the euro to $1.2979, treasury yields fell, with the yield on the 10-year bond falling 5 basis points to 2.4 per cent and S&P 500 futures dipped.