Sept Fed calls kept alive on hopes data disappointment will be revised away

September 7, 2015

U.S. non-farm payroll numbers came in well below forecast on Friday but may not have tolled the death knell on a September date for the first Federal Reserve rate hike in almost a decade.

Initial numbers showed the smallest job gains in five months but, crucially, August data are usually revised up – and steeply.

Even the June and July numbers were revised up pretty sharply by a net 44,000 and suggest the average job gains for the past three months was a solid 221,000.

“Over the past three years (2011 to 2014), the first estimate for payroll gains in August averaged a mere 102,000,” wrote Harm Bandolz at UniCredit in a research note.

“Over time, this initially reported weakness has been revised away – August enjoyed by far larger revisions than any other month – so that the latest vintage of payroll numbers does not anymore reveal the tendency of August payroll gains to initially underperform.”  

That solid job growth has brought the unemployment rate down to just 5.1 percent – its lowest since April 2008 – and year-on-year earnings rose 2.2 percent.

A Reuters poll of Wall Street banks taken after the data showed while they still expect the Federal Reserve to raise interest rates this year their conviction around a September hike has decreased notably in the last month.

Now only seven of 17 dealers see a rate increase coming this month, whereas 13 had expected a September move in an early August Reuters poll.

“Financial market concerns obviously were a negative, but signs of domestic momentum are multiplying,” said Samuel Coffin, economist at UBS, in an email. UBS still expects the Fed to raise rates in September.


No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see