U.S. private hiring solid; trade deficit at seven-month low

Reuters News
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Posted: Nov 04, 2015 9:17 AM

By Lucia Mutikani

WASHINGTON (Reuters) - U.S. private employers maintained a steady pace of hiring in October and the trade deficit hit a seven-month low in September as exports rebounded, suggesting the economy was strong enough to support an interest rate hike from the Federal Reserve in December.

The ADP National Employment Report showed on Wednesday that private payrolls increased 182,000 last month on top of the 190,000 jobs added in September.

"The private sector continues to add jobs at a healthy pace and I think it's likely strong enough that if this pace of job growth continues - if this continues over the month – it will be enough to justify a rate hike in December," said Omer Eisner, chief market analyst at Commonwealth Foreign Exchange in Washington.

The ADP report, which is jointly developed with Moody's Analytics, was released ahead of the Labor Department's more comprehensive employment report on Friday. According to a Reuters survey of economists, nonfarm payrolls increased 180,000 jobs in October, well above the monthly average of 139,000 jobs for August and September.

While below 200,000, economists say the expected job gains in October would be seen as sufficient for the Fed to raise its benchmark interest rate from near zero at its Dec. 15-16 policy meeting. The unemployment rate is forecast steady at 5.1 percent.

U.S. stock index futures held gains after the data, while yields on shorter-dated Treasuries jumped. The dollar was stronger against a basket of currencies.

TRADE DEFICIT LOWEST SINCE FEBRUARY

In a second report, the Commerce Department said the trade gap fell 15 percent to $40.8 billion, the smallest deficit since February. Lower crude oil prices also helped to curb the import bill.

The drop in the trade deficit reversed the widening seen in August, though the prior month's figure was revised slightly down to $48 billion from the previously reported $48.3 billion. When adjusted for inflation, the deficit fell to $57.2billion in September from $63.0 billion in the prior month.

Trade had a neutral impact on gross domestic product for the third quarter, which expanded at a 1.5 percent annual rate. The sharp step-down in growth from the second quarter's brisk 3.9 percent rate mainly reflected a slow pace of inventory accumulation and ongoing spending cuts by energy firms.

The dollar has gained 16.8 percent against the currencies of the United States' main trading partners since June 2014, undercutting export growth. Lackluster global demand also has put a damper on exports.

Exports in September rose 1.6 percent to $187.9 billion, with exports of services hitting a record high. There were increases in exports of capital goods and automobiles. Exports of industrial supplies and materials, however, were the lowest since October 2010.

Exports to Canada, the European Union and China rose in September. Exports to Japan, however, fell 13.8 percent to their lowest level since April 2010.

Imports fell 1.8 percent to $228.7 billion, the lowest level since February. They had received a boost in August from Apple's <AAPL.O> new iPhone model.

Imports of industrial supplies and materials fell to the lowest level since August 2009. Petroleum imports were the lowest since May 2004, reflecting increased domestic energy production and lower oil prices.

The price of petroleum averaged $42.72 per barrel in September, down from $49.33 in August and $92.52 in September 2014.

Imports from China hit a record high in September, leaving the politically sensitive U.S.-China trade deficit at an all-time high of $36.3 billion. That was up 3.8 percent from August.

(Reporting by Lucia Mutikani; Additional reporting by Rodrigo Campos and Dion Rabouin in New York; Editing by Paul Simao)