US jobs data fuels uncertainty over interest rate hike

Washington, Sep 5 (IANS) The uncertainty over whether the US Federal Reserve will raise interest rate in two weeks still holds although the August jobs report showed the US unemployment rate fell to the level the Fed considers to be full employment.

The US unemployment rate in August dropped to 5.1 percent, the lowest since April 2008.

At this level the US central bank sees as full employment, where the unemployment rate is between 5 percent and 5.2 percent, reported Xinhua news agency.

The Labour Department said on Friday the economy added 173,000 jobs in August, less than the market expected, but the previous two months’ job gains were revised upward, thus pushing the unemployment rate down.

The Labour Department revised July’s job gains up to 245,000 from its previous estimate of 215,000, while June’s data was revised up to 245,000 from 231,000.

After revisions, employment gains in June and July combined were 44,000 more than previously reported. Over the past three months, job gains have averaged 221,000 per month.

It was the last major jobs data before the Federal Open Market Committee (FOMC), the Fed’s policy arm, meets on September 16-17 to mull raising the key federal funds rate for the first time since 2006.

Richmond Fed President Jeffrey Lacker on Friday called the jobs report a strong number, saying that it did not change the picture for monetary policy.

Many Fed officials, including Fed Chair Janet Yellen, has repeated that it is appropriate to raise the benchmark interest rate this year.

The recent world market turmoil, slower global growth and low inflation level in the US, have also left the Fed officials divided over the timing for the first rate hike in almost a decade.

At a Brookings event on Thursday, four former Fed economists agreed that the Fed is unlikely to raise short-term interest rate at its September meeting, and all of them expected a rate hike before year-end.

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