U.S. job growth likely accelerated in September as the summer wave of COVID-19 infections began to subside, fueling demand for high-contact services like dining out, and positioning the Federal Reserve to start scaling back its monthly bond buying, Trend reports with reference to Reuters.
The Labor Department's closely watched employment report on Friday would also suggest that an apparent sharp slowdown in economic activity in the third quarter was probably temporary. Still, the labor market and broader economy remain constrained by worker and raw material shortages, wrought by the pandemic.
"With COVID clearly on a downward path again, I think the jobs report should be pretty good," said James Knightley, chief international economist at ING in New York. "But there are still clearly strains in the job market, in that the labor supply story remains very constrained."
According to a Reuters survey of economists, nonfarm payrolls likely surged by 500,000 jobs last month, which would leave the level of employment about 4.8 million jobs below its peak in February 2020.
Estimates range from as high as 700,000 jobs to as low as 250,000. The economy added 235,000 jobs in August, the fewest in seven months, with hiring in the leisure and hospitality industry stalling. Apart from the Delta variant, a seasonal quirk was also a drag, and economists expect August payrolls will be revised higher in keeping with the trend in past years.
COVID-19 infections are decreasing in the United States, with 100,815 new infections reported on average each day, according to Reuters analysis of data from state and local governments, as well as health authorities.
September's employment report is the only one available before the Fed's Nov. 2-3 policy meeting. The U.S. central bank signaled last month that it could start tapering its monthly bond buying as soon as November.
Fed Chair Jerome Powell told reporters that "it would take a reasonably good employment report" to meet the central bank's threshold for reducing its massive bond buying program.
Economists expect that criteria will be met in the September report, which is also expected to show the unemployment rate falling to 5.1% from 5.2% in August.
The likelihood of a taper was bolstered by the U.S. Senate taking a step on Thursday to raise the Treasury Department's borrowing authority until December. read more
"Virtually any payroll gain in excess of August's 235,000 increase would check this particular box for the Fed," said Lou Crandall, chief economist at Wrightson ICAP in New York.