US economy

US jobs growth expected to rebound sharply in September data

The pace of US jobs growth is expected to rebound sharply in September data after an extremely weak report the previous month, setting the stage for the Federal Reserve to begin scaling back its enormous pandemic-related monetary stimulus.

According to a consensus forecast compiled by Bloomberg, employers in the world’s largest economy are expected to add 500,000 jobs in September, exceeding the disappointing 235,000 gains posted in August as the alarming spread of the Delta coronavirus variant deterred people from returning to the workforce and business activity slowed.

Childcare issues improved notably last month as children headed back to school, adding momentum to the labour market recovery.

September’s gains are expected to include the unemployment rate coming down from 5.2 per cent to 5.1 per cent. The data will be released by the Bureau of Labor Statistics at 8.30am Eastern time (13.30BST) on Friday.

Fed chair Jay Powell said that a “decent” report would mean the employment threshold set forward by the Fed to begin winding down its $120bn asset purchase programme would be met.

The US central bank has committed to buying Treasuries and agency mortgage-backed securities at that pace until it sees “substantial further progress” on dual goals of inflation that averages 2 per cent and maximum employment. The first goal has already been met, with consumer price growth hovering around a 13-year high.

Powell said last month, following the sharp slowdown in job creation, that the second goal was “all but met”.

Economists now expect a taper announcement at the next policy meeting in November, despite little improvement in the number of Americans employed or looking for a job.

The so-called labour force participation rate is expected to inch up marginally, from 61.7 per cent to 61.8 per cent. Average hourly earnings, meanwhile, are forecast to rise 0.4 per cent on a month-over-month basis for a 4.6 per cent annual gain.


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