Fed Meeting, Jobs Report Top Week’s Agenda

Federal Reserve policymakers will probably refrain from raising interest rates at Tuesday’s policy meeting even though employment statistics due out Friday may point to rapid economic growth.

The Labor Department is expected to report Friday that the economy added 222,000 jobs in September and that the unemployment rate hovered at a 29-year low--4.2%, analysts said. That would be a strong showing following statistics that suggest the economy could grow by as much as 4% in the second half of the year.

It could also add to the inflation angst among investors, who are worried about higher labor costs, rising global commodity prices and an increase in import prices caused by the weakening of the dollar against other major currencies.

The Labor Department’s report is also likely to point to an acceleration in average hourly earnings. A separate Labor Department report due out Thursday on jobless claims is likely to show that applications for government assistance declined.

By the time the employment report comes out Friday, Fed policymakers will have made their decision on interest rates. Most observers on Wall Street see no action being taken at Tuesday’s meeting of the Federal Open Market Committee, especially with the stock market in turmoil and the Dow Jones industrial average down 10% since mid-August. The FOMC already raised the overnight bank lending rate a quarter-point at its June 30 and Aug. 24 meetings to cool the economy’s growth and guard against inflation.

Meanwhile, the index of leading economic indicators, a gauge of growth over the next half-year, probably declined in August for the first time in four months as stock prices retreated, analysts said. The LEI, due Tuesday from the Conference Board, probably declined 0.1% for the month after rising 0.3% in July, analysts said.

The Commerce Department will report Wednesday that factory orders probably advanced, reflecting strong consumer demand for autos as well as global demand for commercial aircraft. Factory orders probably rose 0.4% in August after climbing 2.1% during July, analysts said.

In other reports this week, the Federal Reserve is expected to report Thursday that consumer credit increased by $6.1 billion in August after rising $8.8 billion during July, analysts said. And the Commerce Department is forecast to report Friday that inventories at the nation’s wholesalers increased 0.6% in August following a 0.9% gain during July, analysts said.