Non-farm figures well below expectations of 733,000 new jobs
The US economy added 235,000 jobs in August, falling well below economists’ forecasts, as it appears the impact of the Delta variant may be disrupting hiring plans amid labour shortages.
Non-farm payroll figures released by the Bureau of Labor Statistics showed a sharp fall-back from the 1.1m jobs created in July, which was an upwardly revised figure.
August’s figures also came in well below expectations of 733,000 new jobs.
The unemployment rate, which was around 5.4% in July, fell to 5.2% last month.
The disappointing figures come days before enhanced federal unemployment benefits are set to expire. They were initially in place to support people who were struggling through economic damage caused by the pandemic.
Members of the Republican Party have previously suggested that the measures remove the incentive for people to go back to work, which has caused some conservative states to end the benefits.
Robert Alster, CIO at Close Brothers Asset Management, comments: “In the eyes of the market, the US labour data is a double edged sword. The staggering weakening we’ve seen in August’s labour activity is a sign that the delta variant is having a hugely damaging impact, which will in turn hit growth and confidence. But conversely, strong labour data – as seen in June and July’s nonfarm payrolls – would push the Fed towards a more Hawkish approach to monetary policy, with a tapering of asset purchases as soon as November and a rate rise in 2022.”
“This runs the risk of stifling US growth before it has had a chance to bed in – which could be the push the Democrats need to remove Powell from office. After eighteen months of uncertainty, stability is the order of the day – we must hope for a steady pace of recovery, rather than volatile booms and busts which will spook consumers, investors, and policy-makers alike.”
