“Lift off” is out until 2016. The first interest-rate hike by the US Federal Reserve in almost ten years is now unlikely before the spring, due to an unexpectedly weak jobs report last week. In September, US non-farm payrolls grew by 142,000, well below forecasts, and August’s gain was revised down to 136,000 from 173,000. It marks the first time since 2012 that employment has risen by less than 150,000 for two months in a row.
The unemployment rate stayed at 5.1%, but this was due to the workforce shrinking as people gave up looking for jobs. Earnings growth remained lacklustre, with wages up by an annual 2.2%. The Fed now has all the excuse it needs to hold fire: markets now imply a 32% chance of a rate rise in December. No wonder the Treasury this week managed to sell a three-month bill on a yield of 0%.