MTS Help Center

The U.S. economy added the fewest number of jobs in seven months in April and Americans dropped out of the labor force, signs of weakness that left some economists anticipating only one interest rate hike from the Federal Reserve this year.

Nonfarm payrolls increased by 160,000 jobs last month as construction employment barely rose and the retail sector shed jobs for the first time since December 2014, the Labor Department said on Friday.

The slowdown in hiring came against the backdrop of weak economic growth, subdued productivity and corporate profits. It prompted some financial institutions, including Bank of America Merrill Lynch and Barclays, to lower their interest rate hike expectations for this year to one from two before the report.

"We now only expect one rate hike in 2016, in September, as we believe it will take longer for policymakers to accumulate sufficient evidence that economic and labor market activity is rebounding after a soft start to the year," said Michael Gapen, chief economist at Barclays in New York.

The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade. Fed officials have forecast two more rate hikes for this year. Economists had expected the first of the two increases in June.

Some analysts said the data, especially if the rise in wages triggered higher inflation, could push the U.S. central bank closer to hiking rates, perhaps as soon as June.

A Reuters survey of Wall Street banks that directly do business with the Fed showed nine out of 17 expected the U.S. central bank to tighten monetary policy twice this year. This compared to 12 of 16 banks a month ago.

Market-based measures of Fed policy expectations have virtually priced out an interest rate increase at the Fed's June 14-15 meeting, according to CME Group's FedWatch. They see a 42 percent probability of a rate increase in September and a 61 percent chance at the December meeting.

New York Fed President William Dudley, however, told the New York Times on Friday that two rate hikes remained a "reasonable expectation."

The dollar initially fell against a basket of currencies on the employment report, but retraced losses after Dudley's comments. Prices for U.S. government debt fell, while stocks on Wall Street reversed earlier losses to end higher.

Markets will eye China's data dump this week in the hope of gleaning insight into the health of the world's second-largest economy, and what it means for the rest of the world.

On Sunday, China reported a 1.8 percent on-year drop in exports to $172.7 billion for April, after an 11.5percent surge in March. Imports dropped 10.9 percent to $127.2 billion on-year, on top of a 13.8 percent fall in March.

Oil futures logged a gain Friday as wildfires in an oil-rich region of Canada and an attack on a Chevron-operated offshore oil facility in southern Nigeria fueled concerns about global crude-output disruptions.

On the New York Mercantile Exchange, West Texas Intermediate futures CLM6, +0.54% gained 34 cents, or 0.8%, to close at $44.66 a barrel, while Brent crude LCON6, +0.60% the global oil benchmark, climbed 36 cents, or 0.8%, to settle at $45.37 a barrel on London’s ICE Futures exchange. Brent ended the week 4.2% lower, while WTI finished the week 2.7% lower.

Managing Saudi Arabia's new energy mega-ministry, set to oversee over half the economy and designed to cut through a tangled bureaucracy to make government more coherent and efficient, will be a formidable challenge.

The new Energy, Industry and Mineral Resources Ministry, under Khalid al-Falih, already chairman of state oil company Saudi Aramco, will handle oil and gas extraction, power generation and distribution, mining and industrial development.

Reference: Reuters, Market Watch