Slow U.S. jobs growth is a yellow light for Fed

Slow U.S. jobs growth is a yellow light for Fed

Construction workers wait in line for a temperature test in order to return to a job site amid the coronavirus outbreak in Manhattan, Nov. 10, 2020. REUTERS/Carlo Allegri/File Photo

WASHINGTON, Sept 3 (Reuters Breakingviews) – The Covid-19 Delta variant slowed U.S. jobs growth to just 235,000 in August, the Labor Department said on Friday. Economists surveyed by Reuters projected an increase of 750,000 positions. Payrolls for restaurants and bars fell by 42,000 while the Black unemployment rate rose 0.6 percentage points, to 8.8%. Those are good reasons for the Federal Reserve to reassess paring its $120 billion in monthly asset purchases.

The more contagious Delta strain was bound to hurt hiring. With that in mind, Fed chief Jerome Powell said a week ago that he still supported reducing bond purchases by the end of this year read more . Most officials on the Fed’s rate-setting committee believed in July that its goal of price stability had been met.

But the disappointing jobs report warrants caution. Inflation data still supports tapering soon but it would be logical for central bankers to see if Delta has a more lasting effect on the economy read more . The Fed’s goal of maximum employment is a ways off, so an interest-rate hike is still on the back burner. (By Gina Chon)

On Twitter http://twitter.com/breakingviews

Capital Calls – More concise insights on global finance:

Royal DSM nutrition deal aids slow motion breakup read more

New equity partner re-energises Technip read more

New York City is on climate notice read more

South Korea’s fintech stretches valuation limits read more

Geely revs up case for wider employee stock awards read more

Editing by Robert Cyran and Marjorie Backman


Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

Read More

Related posts