Jobs growth in August way off market’s expectation.
Last Friday, the U.S. Bureau of Labor Statistics reported 235,000 jobs being created in August, way below the market’s expectation of 720,000. The leisure and hospitality sector, the main driver behind the strong jobs growth for the past several months, added zero jobs amid the rise in COVID cases. With the leisure and hospitality sector taking a backseat, the professional and business services sector led the August’s jobs growth with an increase of 74,000 jobs.
The worsening COVID situation has impacted the job market more negatively in August than in July. 5.6 million people reported not being able to work as their employer wind down business due to the pandemic. This figure rose from the July’s figure of 5.2 million.
All is not lost.
Despite the poor August figure, upward revisions were made to the number of jobs created for the past two months. In July, the number of jobs created was revised from 943,000 to 1,053,000 while in June, the figure was revised from 938,000 to 962,000. In total, these revisions reflected 134,000 jobs more than previously reported.
Furthermore, based on history, nonfarm payroll figures have a tendency of subjecting to substantial revision due to discrepancies as a result of people going on summer vacation. Hence, there is a chance that the scanty figure released this month may be revised upwards to salvage the situation a little even though the shortfall may be too big.
Chance of a September taper announcement is dimming.
Without a doubt, the Federal Reserve is not going to like what they see from this jobs report. This will definitely lower the chance that the central bank will be making a QE tapering announcement during their meeting later this month. As a result, the Fed may postpone such an announcement to the meeting in November while buying some time for the jobs market to prove its worth.
Last Friday, the U.S. Bureau of Labor Statistics reported 235,000 jobs being created in August, way below the market’s expectation of 720,000. The leisure and hospitality sector, the main driver behind the strong jobs growth for the past several months, added zero jobs amid the rise in COVID cases. With the leisure and hospitality sector taking a backseat, the professional and business services sector led the August’s jobs growth with an increase of 74,000 jobs.
The worsening COVID situation has impacted the job market more negatively in August than in July. 5.6 million people reported not being able to work as their employer wind down business due to the pandemic. This figure rose from the July’s figure of 5.2 million.
All is not lost.
Despite the poor August figure, upward revisions were made to the number of jobs created for the past two months. In July, the number of jobs created was revised from 943,000 to 1,053,000 while in June, the figure was revised from 938,000 to 962,000. In total, these revisions reflected 134,000 jobs more than previously reported.
Furthermore, based on history, nonfarm payroll figures have a tendency of subjecting to substantial revision due to discrepancies as a result of people going on summer vacation. Hence, there is a chance that the scanty figure released this month may be revised upwards to salvage the situation a little even though the shortfall may be too big.
Chance of a September taper announcement is dimming.
Without a doubt, the Federal Reserve is not going to like what they see from this jobs report. This will definitely lower the chance that the central bank will be making a QE tapering announcement during their meeting later this month. As a result, the Fed may postpone such an announcement to the meeting in November while buying some time for the jobs market to prove its worth.