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

The more contagious Delta strain was bound to hurt hiring

  
Construction workers wait in line to do a temperature test to return to the job site after lunch, amid the coronavirus disease (COVID-19) outbreak, in the Manhattan borough of New York City, New York, U.S., November 10, 2020.

Construction workers wait in line to do a temperature test to return to the job site after lunch, amid the coronavirus disease (COVID-19) outbreak, in the Manhattan borough of New York City, New York, U.S., November 10, 2020.

Reuters/Carlo Allegri

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

WASHINGTON - 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. 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. 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)

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

(Editing by Robert Cyran and Marjorie Backman) ((SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: http://bit.ly/BVsubscribe))


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