The United States posted a disappointing August labour report yesterday but most analysts say the Federal Reserve is still on track to taper stimulus.
The economy added 169,000 jobs in August, the Labor Department said, fewer than the 177,000 expected by analysts.
The prior two months' job numbers were revised sharply lower, by a combined 74,000, leaving July jobs growth at a tepid 104,000.
The unemployment rate ticked down a tenth point to 7.3%, but for the wrong reason: Fewer people actively sought jobs.
It had been expected to remain unchanged from July at 7.4%.
The decline in the jobless rate - to the lowest level since December 2008 - brought it closer to the 7.0% range favored by the Fed's policy-setting Federal Open Market Committee (FOMC) for the end of tapering.
"Although today's employment report showed anemic job growth, we still expect the FOMC to be on track to announce tapering of its asset purchases at its 17-18 September meeting as we believe that the bar to begin tapering is much lower than that for ending asset purchases completely," Nomura said in a research note.
The August report underscored the slow, painful recovery in the jobs market following the 2007-2009 Great Recession.
In October 2009, four months after the economy officially exited the recession, the number of unemployed peaked at 15.4 million and the jobless rate hit 10.0%.
In August, the number of people unemployed edged down to 11.3 million.
But about four in 10 were ranked long-term unemployed - people officially seeking jobs who had been jobless for at least 27 weeks.
Most analysts said the Fed would go ahead with its plan to reel back its US$85 billion (RM283 billion) a month asset-purchase program, known as quantitative easing, in less than two weeks.
"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%, 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.
Though the 7.3% jobless rate marked a new post-recession low, it was not a sign of underlying strength in the ailing labor market.
The labor force participation rate fell to 63.2% in August as the workforce shed more than 300,000 people.
The biggest job gains were in retail, restaurants, bars and other hospitality businesses, typically low-paying jobs.
"The data suggest that a weak labor market is forcing people to take bad jobs," said Dean Baker of The Center for Economic and Policy Research.
Gains in temporary help services employment jumped to 13,100 from 8,100 in July.
Construction job growth was flat, and manufacturing added a modest 44,000 jobs.
A bright spot was an increase in average hourly earnings of five US cents to US$24.05 that signaled potential gains in consumer spending, which represents the bulk of US economic activity.
Jason Schenker of Prestige Economics predicted the Fed would continue its asset-purchase program until at least the third quarter of 2014.
"Today's report is likely to lead to a very gradual Fed tapering announcement in September, with implementation thereafter," he said.
Doug Handler, chief US economist at IHS Global Insight, said the data had not changed its forecast of a December taper.
"A complete assessment of this report suggests that the health of the labor market remains problematic," he said. - AFP, September 7, 2013.