(September 3 – 10:55 ET) – This morning’s rally based on the good jobs report in the U.S. will be short-lived, says John Johnston, Chief Economist, Americas, at RBC Dominion Securities Inc. in Toronto.
The data is not likely to allay the U.S. Federal Reserve Board’s inflation fears, he says. Johnston contends today’s lower than expected jobs growth is merely a seasonal reaction to extremely strong June and July reports, not evidence of a looser market.
Non-farm payrolls grew by 124,000 in August, well-off economist expectations of 225,000. Average hourly earnings only grew 2¢ in the month after 10¢ gains in past months.
Johnston says the goods sector, which lost 95,000 jobs in August, is behind today’s report and that this drop is largely attributable to seasonal factors, rather than fundamental slowing. “Fed tightening on October 5 is still a key risk,” he says.
-IE Staff