US private payrolls rise less than expected

<p>Conflicting economic data is fuelling uncertainty over the timing of an interest rate hike.</p>

US private employers added fewer workers than forecast in August, new data released today (August 2nd) has revealed.

The ADP National Employment Report showed private payrolls increased by 190,000 last month, which was below economists' expectations for a gain of 201,000 jobs, according to Reuters. However, it was up on the 177,000 positions created in July.

The results give more credibility to a September interest rate rise from the Federal Reserve, along with the fact that the US economy grew significantly more than first estimated in the second quarter of the year.

It expanded at an annual rate of 3.7 per cent, beating an initial report of 2.3 per cent on July 30th, the country’s Commerce Department has revealed.

Poor data from China

However, the chances of an early interest rate hike have been diminished by a global stock market sell-off in the wake of poor economic data from China. 

The country's official manufacturing purchasing managers' index (PMI) came in at 49.7 in August, down from 50 in July. In addition, the final Caixin/Markit manufacturing purchasing managers' index (PMI) stood at 47.3 in August, down from 47.8 in July.

Meanwhile, a key US manufacturing index from the Institute for Supply Management (ISM) for August published this week was down to its lowest level since May 2013.

New York US Federal Reserve president William Dudley said last week that a rate rise in September "now seems less compelling" than it was in July.

"The slowdown in China could lead… to a slower global growth rate and less demand for the US economy," he said.

However, he didn't completely dismiss a September rate rise, saying the case "could become more compelling by the time of the meeting as we get additional information on how the US economy is performing".

But Fed vice-chairman Stanley Fischer told CNBC last week it was too early to decide whether the stock market rout had made a rate hike this month less compelling.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.