Sept. Rate Hike Unlikely, with Worse-than-Expected 151,000 Jobs Added in August

The data-dependent Federal Reserve has another excuse not to raise rates, with August’s jobs report showing a much lower-than-expected number of new jobs added to the U.S. economy last month.

The government reported 151,000 new jobs added by employers, badly missing analysts’ view for 180,000 jobs. That number is also way down from the prior three-month average of 232,000 new jobs added per month.

Average hourly earnings grew just 0.1%, while the national unemployment rate remained unchanged at 4.9% in August. That missed analyst expectations for a tick down to 4.8%.

The Federal Reserve meets on Sept. 20 and 21 to discuss potential policy changes, and many pundits were beginning to expect a rate hike this month. That possibility is all but off the table now, with the Fed continuing to stress that its moves will be based solely on economic data.

With the potential a September rate increase substantially lower, equities and bonds should both see a boost in the coming weeks. In an era where “bad news is good news,” investors have bought stocks and bonds on negative data reports, while selling them amid positive ones.

Continuing that trend, investors are cheering the negative jobs news so far today. The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) rose $0.40 (+0.22%) to $184.50 per share in premarket trading this morning. The largest ETF tied to the DJIA has risen 5.81% year-to-date.

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