Weak US jobs report still leaves Fed taper on track

The United States posted disappointing jobs growth in August but the unemployment rate fell, according to Government data yesterday that kept expectations of a Federal Reserve stimulus taper on track.

The economy added 169,000 jobs in August, the Labor Department reported, fewer than the 177,000 expected by analysts.

And the prior two months’ job numbers were revised sharply lower, slashing July jobs growth to 104,000.

The unemployment rate ticked down a tenth point to 7.3 per cent, the lowest rate since December 2008, but for the wrong reason: fewer people were actively seeking jobs.

The average forecast was for the jobless rate to hold unchanged from July at 7.4 per cent.

Most analysts said the weak August labor report would not discourage the Fed from tapering its $ 85 billion a month asset-purchase program, known as quantitative easing, as soon as its September 17-18 monetary policy meeting.

“The August employment report was a touch weaker than we expected but it doesn’t change our expectation that the Fed will begin dialing back its pace of asset purchases later this month,” said Ryan Sweet, senior economist at Moody’s Analytics.

“The Fed is going to look at the big picture,” Sweet said.

The Fed has hinged any taper on continued broad improvement in the economy.

A batch of recent positive data would support that view, including an upward revision to second-quarter US economic growth to 2.5 percent, a strengthening housing market, robust auto sales, and strong ISM manufacturing and services sector surveys.

The Labor Department’s jobs report was mostly tilted to the downside.

The private sector added 152,000 jobs in August, short of analyst expectations of 180,000.

Government, which has been shedding jobs in recent months, added 17,000 jobs last month, partly reversing July’s decline of 23,000.

COMMENT NOW