Markets Disappointed On Less-Than-Impressive NFP Data

Chances for a U.S. interest rate increase have reduced after news that the labour market has not strengthened as expected, and also weighed on the U.S. stock markets. The Nonfarm Payrolls (NFP) data released on Friday by the Department of Labour showed that the world's strongest economy added 142,000 new during September. While the data were stronger than the previous month's result of 136,000, it fell considerably short of estimates calculated by analysts for a much stronger 203,000. Upward revisions were also expected for the NFP results of July and August, but those were revised downwards to 223,000 and 136,000 respectively and only provided more evidence to speculations that the Federal Reserve might not proceed with an interest rate increase before the end of the year. According to a separate household survey, the unemployment rate remained steady at 5.1%.

The September NFP data increase were led by an increase of the health care sector by 34,000 jobs, while 31,000 new positions were filled in the professional and business services and also the retail sector has expanded by 24,000 jobs.

The NFP data also inflated fears that the halt to the global economy's growth, mainly due to China's economic slowdown in recent months, began having a domino effect on the U.S.. The data also appear to be in contrast to earlier comments by the Federal Reserve (Fed) Chairwoman Janet Yellen that the U.S. economic outlook appears solid and that she and the rest of the policymakers are not anticipating some adverse economic developments to significantly derail the Fed's policy.

The U.S. labour market has been growing stronger for a long time but now it looks like that the impressive tempo faded during the summer period. The percentage of America's work force who are currently employed or looking to for a has decreased to 62%. And those who are on a payroll have remained on a flat salary and worked for less hours per week.

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