NEW YORK (Reuters) - U.S. employers slowed their pace of hiring in July but the jobless rate fell anyway, mixed signals that could make the U.S. Federal Reserve more cautious about drawing down its huge economic stimulus program.
The number of jobs outside the farming sector increased by 162,000, the Labor Department said on Friday.
That was below the median forecast in a Reuters poll of 184,000. Compounding that miss, the government also cut its previous estimates for hiring in May and June.
At the same time, the jobless rate fell two tenths of a point to 7.4 percent, its lowest in over four years. Gains in employment fueled some of that decline, but the labor force also shrank during the month, robbing some of the luster from the decline in the unemployment rate.
U.S. June personal income rose 0.3 percent
COMMENTS: BRUCE McCAIN, CHIEF INVESTMENT STRATEGIST, KEY PRIVATE BANK, CLEVELAND, OHIO:
"The anticipation of stronger growth in the second half I think has led us to expect more improvement sooner than is realistic given the sluggish growth in the first half of the year… I think this was a reminder of that."
MARK CHANDLER, GLOBAL HEAD OF CURRENCY STRATEGY AT BBH:
"The U.S. employment report is disappointing. Fewer people are working, a shorter work week and for lower pay.
"The Fed's tapering decision does not rest on a single print, especially of high frequency and noisy data, but on the margins, between the FOMC statement that gave no hint of a move in September, a manufacturing PMI that showed prices falling and now a soft employment report, look for some soul searching by those who thought and acted as if reducing long term asset purchases next month was a done deal."
MARCUS BULLUS, TRADING DIRECTOR AT MB CAPITAL:
"With a lower than expected jobs number but a better-than expected drop in the unemployment rate, it's hard to know which way to turn. The result is that markets are likely to stay relatively neutral, with a slight tilt towards the negative.
"The downward revisions to both May and June are also a setback. The world's biggest economy is still growing, but it's not growing as much as we had expected or hoped.
"The taper is still set to happen but after Wednesday's moderate GDP number and this underwhelming dataset it may drift away from September."
MOHAMED EL-ERIAN, CHIEF EXECUTIVE OFFICER OF PIMCO, NEWPORT BEACH, CALIFORNIA:
"Today's jobs report points to a labor markets that continues to improve, but still only at a modest rate unfortunately. It is disappointing that the 162,000 job creation in July was accompanied by an unusual slip in average earnings. We, and Congress in particular, should never lose sight of the internals of the monthly report, particularly persistently high long-term unemployment and alarming youth joblessness."
TIM GHRISKEY, CHIEF INVESTMENT OFFICER, SOLARIS GROUP, BEDFORD HILLS, NEW YORK:
"The report shows that the health of the labor market is improving but at the same time, unhealthy. The stock market is a bit schizophrenic here, because while it does keep the Fed more on the sidelines, it's not a good sign of our economy. There is this balancing act here where the market wants growth but not too much too soon."
MILTON EZRATI, SENIOR ECONOMIC STRATEGIST, LORD ABBETT & CO, JERSEY CITY, NEW JERSEY:
"It's a much weaker number than was generally expected, and it's not troubling but it's a reminder that the labor market remains weak. We've had some good numbers lately and it gave people a little more enthusiasm than was warranted. This is a reality check."
ADAM SARHAN, CHIEF EXECUTIVE OF SARHAN CAPITAL IN NEW YORK:
"The market is yawning at the news. At this stage of the game, in some perverse way, weak news is bullish for the market because it gives the Fed no choice but to continue printing money. If it had been way stronger, that would also have been bullish because it means the economy is growing. The bulls are in a win-win situation."
GORDON CHARLOP, MANAGING DIRECTOR, ROSENBLATT SECURITIES, NEW YORK:
"The idea that the unemployment dropped at all, went below 7.6, is showing that the trend is going the right way. We're sort of grinding along here. We're not surging.
"I don't think there's anything here that will cause the Fed to do anything significant, so from a trading standpoint I think the numbers are more or less benign."
TODD SCHOENBERGER, MANAGING PARTNER AT LANDCOLT CAPITAL IN NEW YORK:
"Similar to the reaction following Wednesday's weak GDP report, today's jobs data is terrifying for Main Street. Despite the proactive actions from the Fed and stimulus help from Capitol Hill, the labor market remains stuck in quicksand.
"For Wall Street, however, this is terrific news as tepid growth in jobs means the Fed will continue with QE and delay tapering its current bond buying program."
JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDEMARKETS, WOODCLIFF LAKE, NEW JERSEY:
"This disappointing payroll number will undo some of the positive market momentum on the economy and the dollar from yesterday's strong ISM and jobless claims reports and justify the Fed's caution on quantitative easing.
"Still, with good or improving economic statistics outnumbering poor over the past several weeks it is likely that better numbers will return in August or that the July result will gain upon revision."
(Americas Economics and Markets Desk; +1-646 223-6300)