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US jobs miss not likely to delay Fed's 'taper', expert says

15:45, 8 October 2021

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The US economy added just 194,000 new jobs in September, falling below Wall Street predictions as investors eye the Federal Reserve’s cutback to its asset buying program.

But the blip in hiring is unlikely to bend the Fed's schedule for a "taper" to its emergency market support program, one expert says.

A report issued by the US Department of Labor showed nonfarm payroll employment came up more than 300,000 jobs short of Wall Street expectations. Economists and market analysts predicted 500,000 new positions would be added over the month in this sector alone.

While the job data did not meet expert predictions, US unemployment rate dropped to 4.8% from 5.2% as notable job gains occurred in leisure and hospitality, professional and business services, retail trade, transportation and warehouse work.

Employers are hiring

In September, employment in leisure and hospitality increased by 74,000, professional and business services added 60,000 jobs, and employment in retail trades rose by 56,000.

Employment in manufacturing added 26,000 new jobs but those numbers are down by 353,000 since February 2020.

Employment in transportation and warehouse work jumped by 47,000. Overall, the sector sits at 72,000 above its pre-pandemic level in February 2020.

Employment in the information industry improved by 32,000, social assistance added 30,000 new jobs, while construction employment rose by 22,000 but remains below levels recorded in February 2020.

In September, employment lost 144,000 positions in local government education as state government education cut 17,000 jobs.

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The employment situation in health care and financial activities showed little change.

Fed tapering won’t change

Joey Von Nessen, a research economist at the University of South Carolina’s Darla Moore School of Business, said, “The sluggish job growth is not a new trend and will likely not affect the current timeline for the Federal Reserve’s tapering of asset purchases.”

As cases for Covid-19 spike again in American cities, Von Nessen said the significant decline in the labour force could be attributed to ongoing pandemic-related supply issues and job shortages.

“Such a decline reflects a broader connection between economic recovery and the number of Covid cases,” he said. “The rise in cases in August and early September caused a pullback among some workers over virus-related concerns.”

Jobless claims drop

The latest data compiled by the US Department of Labor also shows the advance figure for seasonally adjusted initial claims was 326,000 for the week ending on 2 October, a decrease of 38,000 from the previous week's revised level.

Although the report highlighted a decrease in weekly claims, the number of people applying for unemployment benefits has not returned to pre-pandemic levels in the low 200,000s.

Market reply

In early trading on Friday, the Dow Jones Industrial Average is up slightly at 0.01%, the S&P 500 is up 0.11%, while the Nasdaq Composite is 0.12% higher.

Read more: Jobless claims drop, market experts point to improving economy

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