Regency Associates: Any hopes that US economy cheerleaders may have had for a Federal Reserve rate hike in 2015 were dealt a crushing blow at the end of last week when the closely-watched US nonfarm payrolls data for September showed the US economy created only 142,000 new jobs compared with consensus forecasts for a 203,000 gain.

The bad news on jobs extended to last month’s number, too. The 173,000 jobs the report claimed the economy created in August was revised downwards to just 136,000 against expectations for an upwards revision to 200,000.

Compounding the gloom was a drop in the number of hours worked as well as average hourly earnings growth that increased at a lackluster annual rate of just 2.2%.

“This vindicates what we’ve been saying on the subject of US interest rate hikes,” Shem Orbison, chief economist at Regency Associates noted. “There’s this ridiculous notion permeating the markets that the Fed’s going to have to wait until 2016 to raise interest rates but what do these people see happening in the US economy to make it more able to withstand higher borrowing costs in 2016 if it can’t bear them now. We think it’s safe to say that the next major move at the Fed will be to decide how best to convince markets of the case for more QE,” he added.

The jobs recovery in the US has come under fire for the type of jobs it is creating. More jobs are part time and more of them are based within service sector with jobs in fast food, hospitality and healthcare being the most prevalent.

Regency Associates said it is positioning its portfolio to reflect a continuation of easy monetary policy in the US.

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