U.S. employment growth in September is unexpectedly weak

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The pace of US employment growth has stagnated for the second straight month, raising questions about whether the Fed can begin to curtail the huge pandemic monetary stimulus as early as next month.

Employers in the world’s largest economy added just 194,000 jobs in September, below the 366,000 increase posted in August, well below the monthly average of 561,000 since the beginning of the year. Economists expected an increase of 500,000.

The unemployment rate fell for the third straight month, dropping from 5.2% to 4.8%.

Unexpectedly weak reports show that many forces that are preventing employees from returning to the workforce are persistent, suggesting a more difficult path for the US economy to move forward.

Schools reopened last month to help alleviate some of the childcare problems that have discouraged workers, but there is still a shortage. This raises concerns that the world’s largest economic recovery could be delayed longer than initially expected.

Sarah House, senior economist at Wells Fargo, pointed out that the turmoil associated with the delta variant of the coronavirus has had a major impact on the recovery of the labor market, saying, “Supply problems remain deeper than we expected. I see it as there. “

“It takes time to change the way people think about the risk of getting back to work.[and]Even if the children start going to school, there are doubts about how consistently they will come back, “she added.

In a statement on Friday, President Joe Biden said the report covered a period when the Delta case was much higher than it is today. “More jobs, higher wages, lower unemployment. That’s progress,” he said.

He also repeated his appeal to Congress to get him through Expenditure plan“If it doesn’t move, there is a risk of losing its superiority as a country,” he warned.

The increase was driven by the leisure and hospitality sector, which added only 74,000 roles. This indicates that Americans may have reduced travel and eating out in the delta’s surge. The industry is most sensitive to pandemics.

More retail, professional and business service jobs, more transportation and warehousing posts. The number of public education jobs has declined, and 161,000 jobs have fallen across local and government education.

The Bureau of Labor Statistics (BLS) pointed out that seasonal factors are also an issue. “Recent changes in employment are difficult to interpret because pandemic-related staffing fluctuations in public and private education distort the patterns of regular seasonal employment and furloughs,” he said.

Employment in the food service industry and other eateries has remained largely unchanged for the second straight month. From January to July, the sector reported an average monthly profit of 197,000.

Wage growth has recovered, with average hourly wages for all employees rising 19 cents to $ 30.85, up 0.6% month-on-month and up 4.6% annually. Recent data suggest that “increasing labor demand following a recovery from a pandemic may have put upward pressure on wages.”

Federal Reserve Board Chair Jay Powell said a “decent” employment report means that the employment benchmarks set by the central bank to begin shrinking its $ 120 billion asset purchase program will be met. .. September data could add wrinkles to the plan, creating what Afsaneh Beschloss, CEO of investment firm Rock Creek, said was a “challenge” for the Fed.

Five million more Americans are still absent from work than when the pandemic began, indicating that the recovery in the labor market has lost momentum.

Powell set the standard “quite low,” but Jeffreys economist Thomas Symons said September data may not be weak enough to take the central bank off course from the transition to tapering in November. Stated.

Andrew Hunter, senior US economist at Capital Economics, said that while labor shortages are putting pressure on wages, signs of slowing growth are “unpleasant for Fed officials in the coming months. Seems to be in a good position. “

The Federal Reserve Board has decided to buy government bonds and government mortgage-backed securities at that pace until “substantial further progress” is seen on the dual goals of average 2% inflation and maximum employment. I promised. The first goal has already been achieved, with consumer price inflation remaining at its highest level in about 13 years.

Powell said last month that the second goal was “almost achieved” following the sharp slowdown in job creation.

The Federal Reserve Board chairman said authorities broadly support stimulus measures ending in late 2022, but the timing and pace of tapering does not give a “direct signal” about the timing of future rate hikes. Said.

High-ranking government officials have encouraged a patient approach to tightening policies, taking into account a slight improvement in labor force participation that tracks the number of Americans employed or looking for a job.

In September, there was almost no change at 61.6%. Last month, the number of so-called prime-age workers in the workforce declined, questioning long-standing economists’ predictions that Americans would return to work all at once when schools reopened and the federal unemployment allowance expired.

US Treasury yields initially fell following employment reports, but then rose beyond maturity. The biggest move was the longer term Treasury. Short-term government bonds, which move in line with interest rate expectations, ended up with little change on the day, as did US equities.

Additional report by Kate Duguid and Taylor Nicole Rogers in New York

U.S. employment growth in September is unexpectedly weak

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The post U.S. employment growth in September is unexpectedly weak appeared first on Eminetra.

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