"The government shutdown and debt limit brinksmanship hurt the already softening job market in October. Average monthly growth has fallen below 150,000. Any further weakening would signal rising unemployment."
- Mark Zandi, chief economist of Moody's Analytics
A series of weaker-than-expected data from the United States continues, as private hiring slowed, while cost of living posted the smallest annual gain in five months. On Wednesday a report from the Automatic Data Processing (ADP) and Moody's Analytics showed the ADP non-farm employment rose just 130,000 in October, down from a downwardly revised 145,000 a month earlier, and 20,000 below analysts' forecasts. The figure is also significantly lower than the average monthly gain of 161,000 since the beginning of the year.
Another key aspect of economic health disappointed market participants, as consumer price index, published by the Labor Department, inched higher just 0.2%, in line with analysts' forecasts. The so-called core inflation, which strips out food and fuel prices, climbed 0.1%. Overall CPI climbed 1.2% in the 12 months through September, the weakest gain since April. Inflation is fluctuating well below the Federal Reserve's target for a quite long period of time. It means policymakers can focus more on the employment side and not being constrained by inflationary pressure. However, weak job creation and low inflation are both suggesting the world's largest economy is struggling to build up steam.
As it was widely expected, the Fed did not provide any surprises and decided to keep it stimulus programme by buying $85 billion in bonds per month, also saying there should be more evidence the economy will gather momentum.
© Dukascopy Bank SA