US job growth slows sharply in September

President Biden wants 'faster' progress as US economy adds a fewer-than-expected 194,000 jobs

US President Joe Biden admitted he would like to see "faster" economic progress after US employment increased far less than expected in September amid a decline in government payrolls.

The US Labour Department said in its closely watched employment report on Friday that nonfarm payrolls increased by 194,000 jobs last month. Data for August was revised to show 366,000 jobs created instead of the previously reported 235,000 positions.

Economists polled by Reuters had forecast payrolls increasing by 500,000 jobs. Estimates ranged from as high as 700,000 jobs to as low as 250,000.

"Maybe it doesn't seem fast enough. I'd like to see it faster and we're gonna make it faster," Mr Biden said. "We're making consistent steady progress, though."

Hiring could pick up in the months ahead as Covid-19 infections subside and people resume the search for work.

More than 186 million Americans are now vaccinated and hospitalisations are down by 25 per cent, Mr Biden said.

The unemployment rate fell to 4.8 per cent from 5.2 per cent in August.

Mr Biden, whose economic agenda faced a setback in US Congress last week, once again pushed for his infrastructure and social-spending bills that he says would create an additional 2 million jobs per year.

This is "not about left versus right or modern versus progressive or anything else that pits Americans against one another," he said in an apparent reference to warring factions within the Democratic party that have stalled progress on the bills.

The US risks losing its edge on the global stage if it does not move to act on infrastructure investment, he said.

The modest gain in jobs could temper expectations for a swift acceleration in economic growth following an apparent sharp slowdown in the third quarter. The labour market and economy remain constrained by worker and raw material shortages caused by the pandemic.

September's employment report is the only one available before the Federal Reserve's November 2-3 policy meeting. The US central bank signalled last month that it could start tapering its monthly bond buying as soon as November.

US Federal Reserve Chair Jerome Powell told reporters that "it would take a reasonably good employment report" to meet the central bank's threshold for reducing its massive bond buying programme.

The economy hit a speed bump in the third quarter in part because of the summer flare up in coronavirus cases, an ebb in the flow of pandemic relief money from the government and scarce raw materials, which have hammered motor vehicle sales.

In the months ahead, there is cautious optimism that the labour squeeze could ease following the expiration of federal government-funded benefits in early September. The expanded benefits, which offered unemployment checks to people who did not qualify for the regular state jobless benefits, were blamed by businesses and Republicans for the worker shortage.

There were a record 10.9 million job openings as of the end of July. But many unemployed appeared to have stashed away some of the money from the government, and are therefore in no hurry to start looking for jobs.

The labour force participation rate, or the proportion of working-age Americans who have a job or are looking for one, barely budged even as about 25 states led by Republican governors terminated the expanded benefits in summer.

Some economists say a significant portion of people who dropped out of the labour force have retired, thanks to a strong stock market and record house price gains, which boosted household wealth. Self employment has also increased.

Updated: October 8th 2021, 6:44 PM
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