August Job Report Could Produce September U.S. Interest-Rate Cut

By John S. McClenahen Sept. 6 and Sept. 24 are shaping up to be very important economic dates for the U.S. On Sept. 6, the first Friday after the long Labor Day weekend in the U.S., the U.S. Labor Department is scheduled to release employment data for August. If the numbers are as weak as they were in July, when payrolls rose by only 6,000 people, the Federal Open Market Committee (FOMC) "will probably ease" the influential federal funds rate at its Sept. 24 meeting, speculates Bruce Steinberg, chief economist at Merrill Lynch & Co., New York. The target level for the federal funds rate remains at 1.75%, the FOMC having left it unchanged at its most recent meeting on Aug. 13. However, Steinberg actually is betting that August job market data will improve and the FOMC will again keep the short-term rate at 1.75%. Initial claims for unemployment benefits "are running at a 17-month low, pointing to stronger payroll gains," notes Steinberg.

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