Roundup: U.S. jobs data for August fuels uncertainty over interest rate hike

The uncertainty over whether the U.S. Federal Reserve will raise interest rate in two weeks still holds although the August jobs report showed the U.S. unemployment rate fell to the level the Fed considers to be full employment.

The U.S. unemployment rate in August dropped more than expected to 5.1 percent, the lowest since April 2008 and at the level the U.S. central bank sees as full employment, where the unemployment rate is between 5 percent and 5.2 percent.

The Labor Department said on Friday the economy added 173,000 jobs in August, less than the market expected 223,000, but the previous two months' job gains were revised upward, thus pushing the unemployment rate down.

The Labor Department revised July's job gains up to 245,000 from its previous estimate of 215,000, while June's data was revised up to 245,000 from 231,000. After revisions, employment gains in June and July combined were 44,000 more than previously reported. Over the past three months, job gains have averaged 221,000 per month.

It was the last major jobs data before the Federal Open Market Committee (FOMC), the Fed's policy arm, meets on Sept. 16-17 to mull raising the key federal funds rate for the first time since 2006.

Richmond Fed President Jeffrey Lacker on Friday called the jobs report a strong number, saying that it didn't change the picture for monetary policy. Lacker has been a vocal proponent of raising interest rate early.

Following the jobs report, U.S. stocks fell, as many investors saw the jobs report strong enough for the Fed to possibly raise the interest rate later this month.

According to the recent minutes of the FOMC, most Fed officials believed the economic conditions were approaching the point for policy firming, especially on the employment side.

The minutes left mixed signals on whether the Fed officials would decide to raise the interest rate during next monetary policy meeting in September. Many Fed officials, including Fed Chair Janet Yellen, has repeated that it's appropriate to raise the benchmark interest rate this year. Market investors widely see September or even later as the most likely time for a Fed rate increase.

The recent world market turmoil, slower global growth and low inflation level in the United States, have also left the Fed officials divided over the timing for the first rate hike in almost a decade.

New York Fed President William Dudley said recently that the prospect of a September rate hike "seems less compelling" than it was only weeks ago. But the Fed Vice Chair Stanley Fischer told U.S. media that it is too early to determine if the recent market turmoil has made a September rate hike more or less compelling.

At a Brookings event on Thursday, four former Fed economists agreed that the Fed is unlikely to raise short-term interest rate at its September meeting, and all of them expected a rate hike before year-end. Enditem