US recruitment slows, consumer inflation stays muted
US private-sector employers hired the fewest number of workers in six months in October while tepid domestic demand kept inflation benign last month, suggesting the economy was still in need of stimulus from the Federal Reserve.
Employers in the vast private sector added 130,000 new jobs to their payrolls this month, the ADP National Employment Report showed on Wednesday. That was the lowest reading since April and was below economists' expectations for a gain of 150,000 jobs.
September's private payrolls gains were revised down to 145,000 from the previously reported 166,000 jobs.
The report, jointly developed with Moody's Analytics, suggested that the 16-day government shutdown early in the month had weighed on an already struggling labor market.
"ADP was weaker than expected, which is consistent with the weaker tone of labor market data we have had recently," said Eric Stein, co-director of the Global Income Group at Eaten Vance Investment Managers in Boston.
Private jobs growth slowed for the fourth month in a row this month, according to ADP data. Average monthly jobs growth has fallen below 150,000, which if sustained would make it difficult for the unemployment rate to fall further.
In a separate report, the Labor Department said its Consumer Price Index increased 0.2pc last month as energy prices rebounded, after edging up 0.1p in August.
In the 12 months through September, the CPI increased 1.2pc, the smallest gain since April. It had advanced 1.5pc in August.
Economists polled by Reuters had expected consumer prices to rise 0.2pc last month and increase 1.2pc from a year ago.
U.S. Treasury debt prices held gains after the data.
The weak labor market picture and benign inflation environment should allow the Fed to stay the course on its monthly bond purchases as it tries to stimulate the economy through low interest rates.
The Fed targets 2pc inflation, although it tracks a gauge that tends to run a bit below the CPI.
Officials from the central bank are expected to keep their monthly $85bn bond purchasing program in place when they conclude a two-day meeting later on Wednesday.
Stripping out the volatile energy and food components, the so-called core CPI nudged up 0.1pc, rising by the same margin for a second consecutive month.
That took the increase over the past 12 months to 1.7pc after rising 1.8pc in August.
This measure touched a two-year low of 1.6pc in June and the slowdown last month could catch the attention of some Fed officials who are concerned about inflation being too low.
Last month, inflation was lifted by a 0.8pc rise in energy, which accounted for about half of the rise in the CPI. Energy prices had dropped 0.3pc in August.
Food prices were flat in September. That was the weakest reading since May.
Within the core CPI, housing and medical care costs advanced, maintaining a recent trend. Owners' equivalent rent of primary residence rose 0.2pc after rising 0.3pc in August.