Private job growth was a little better than expected in July, though all of the new positions came from the services sector, according to the latest report from ADP and Moody's Analytics.
Companies added 179,000 positions for the month, topping Reuters estimates of 170,000. That was a slight increase from June, which saw an upwardly revised 176,000, 4,000 more than originally reported.
The bad news was that job growth was unbalanced. Services added 185,000 positions, but the goods-producing sector actually lost 6,000 workers. Construction posted a loss that matched that 6,000 number, while manufacturing added 4,000, which actually was a turnaround from June when the sector lost 15,000.
Low inflation allows the Federal Reserve to keep U.S. interest rates lower for longer in order to boost the economy and jobs, a top Federal Reserve official said on Wednesday.
"If we can keep creating jobs while inflation is in check, let's do that," Minneapolis Fed President Neel Kashkari said at a meeting with community activists and members of the black community in Minneapolis who were airing their concerns about low pay and high unemployment. "We can do our best to make the job market as strong as possible."
With the U.K. economy undergoing a crisis of confidence, the Bank of England is gearing up to loosen policy this week. Market participants are waiting to see if the BOE adopts the 'sledgehammer' strategy advocated by its chief economist Andrew Haldane, or takes a more muted approach.
♦ RATE CUT: Seen as the most likely choice, all but two of 52 economists in a survey predict the Monetary Policy Committee will slash its key rate for the first time since 2009. Most forecast a 25 basis-point reduction to a record-low 0.25 percent. While this would have the most direct impact on the nation’s growth engine — consumers — it risks squeezing banks’ margins. With Carney previously signaling a reticence to cut below zero, any comments on how low the rate could eventually go or the potential for negative rates, will be closely scrutinized.
♦ QUANTITATIVE EASING: The central bank has already scooped up about a third of the U.K. government bond market as part of a program that started in March 2009, and could outline plans to buy more. Economists are less certain about this, with 23 of 44 surveyed saying the asset-purchase target will be left at 375 billion pounds ($499 billion). Of those that see an expansion, estimates range from 10 billion pounds to 150 billion pounds. While this might bolster confidence, gilt yields are already near record lows, potentially limiting any impact.
The BoE's chief economist, Andy Haldane, has said he is willing to respond to weak growth by using "a sledgehammer to crack a nut", but another, Kristin Forbes, said last month she had not seen enough evidence to support a rate cut.
Oil prices jumped more than 3 percent on Wednesday, with U.S. crude futures returning to above $40 a barrel, after a larger-than-expected gasoline draw offset a surprise build in crude stockpiles in the No. 1 oil consumer.
Gasoline stocks slumped by 3.3 million barrels, versus forecasts for a 200,000-barrel drop. The large draw assuaged some market participants' worry of a gasoline glut amid the peak U.S. summer driving season.
U.S. West Texas Intermediate (WTI) crude CLc1 settled up $1.32, or 3.3 percent, at $40.83 a barrel. On Tuesday, it settled below $40 a barrel for the first time since April.
Brent crude LCOc1 rose $1.30, or 3.1 percent, to settle at $43.10. It hit a more than three-month low of $41.51 the previous day.
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