Job Growth Slows: Fed Watches
A: Employers added 138,000 jobs in April, missing forecasts by economists surveyed by Briefing.com who expected the # to come in around 200,000. Although jobs created fell, the average hourly wage was up 9 cents, or 0.5 percent, to $16.61. This is a mixed bag for the fed to digest as the slowing growth of jobs is a sign the economy is cooling but the rise in hourly wages is another warning sign of inflation.
According to CNN Money Article:
One reason that the Fed keeps an eye on employment is concern that a tighter labor market will drive up wages and feed inflationary pressures. Average hourly wages are now up 3.8 percent over the last 12 months, which is more than the 3.4 percent increase in prices paid by consumers over the 12 months ending in March. On Wall Street, stocks rose on hopes that the weaker-than-expected labor market might mean the Federal Reserve is not as likely to raise interest rates at its June 29 meeting. Another quarter-percentage point increase is widely expected at the meeting Wednesday.
It certainly is getting interesting with oil tumbling the past few days and now this weaker than expected jobs report. If Bernanke really meant what he said about being more data dependant (although he corrected himself to Maria Bartiromo a day later saying he will fight inflation pressures accordingly) with regard to future interest rate moves, than he is starting to get some data that would suggest a pause after next week's expected 1/4 point rate hike!
I will continue to monitor this but for now I am 95% certain of next weeks 1/4 point rate hike and about 50/50 for another 1/4 rate hike at June's meeting.
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