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October report on employment in the US was weaker than forecasts

On Friday, data from the US labor market for October was published, which turned out to be worse than forecasts. The number of employed in the non-agricultural sector of the United States in October increased by 261 thousand people. Analysts predicted that this figure will be about 300 thousand, because in September employment in the US fell by 33 thousand due to hurricanes. However, the unemployment rate in the US reached a record low and amounted to 4.1% against 4.2% in September.

Data on salaries also disappointed the markets. The report recorded a lack of growth in the average hourly wage for Americans in October. It was expected that this figure would be 0.2%. In September, salaries increased by 0.5%, which was probably due to the influence of hurricanes. In the annual comparison, wage growth also turned out to be lower than expected and amounted to 2.4% against the expected 2.7%.

The dynamics of wages is closely monitored by the Fed. Experts believe that for achieving inflation target level requires an annual increase in wages at a level of 3% or more. Insufficient inflationary pressure is a source of concern to the Fed’s officials and acts as an obstacle to a more dynamic tightening of monetary policy.

After the last FOMC meeting, the market participants had no doubts that the regulator would increase the base interest rate on federal funds in December. However, there are still concerns that low inflation will force the Fed to revise its plans.

Against the backdrop of a weak employment report, the US dollar rate declined for a short time against the basket of major currencies. However, soon, the US national currency recovered its positions due to the fact that business activity in the US services sector grew stronger than forecasts.