Impact of US Government shutdown felt in weaker-than-expected September jobs report
American economy still fragile, report shows
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Tuesday 22 October 2013
American employers added 148,000 jobs over September, underscoring the still fragile state of the labour market as the Federal Reserve considers changes to its bond buying programme.
Analysts had expected the non-farm payrolls report for the month, which was delayed owning to the partial shutdown of the federal government, to show a gain of 180,000 jobs.
The US Labour Department had been scheduled to release the report, which also showed that the unemployment rate had dipped slightly to 7.2 per cent, on 4 October. But the shutdown forced its Bureau of Labour Statistics to temporarily pare back its staff from more than 2,400 people to just three.
The figures will be scrutinised closely by policymakers at the Fed, who decided against cutting the scope of the central bank’s $85bn per month bond buying programme last month amid uncertainty about the US economic recovery.
Their task will be complicated further at this month’s meeting by the 16 day government shutdown as Republicans and Democrats argued over the budget, the debt ceiling and the President’s health reforms. According to Standard & Poor’s, the ratings agency, the impasse in Washington is likely to chop 0.6 per cent off US growth in the final three months of the year.
Although lawmakers have given themselves some time to come up with a longer term fix before the issues come up for debate yet again, concerns remain that the US - and the world - might have to endure another round of costly political jousting early next year.
Against that backdrop, the Fed, which was expected to signal the beginning of the end of the era of cheap money before 2013 was out, is likely to keep its policies unchanged for now. Speaking to CNBC earlier this month, Chicago Fed President Charles Evans acknowledged that a cut in the bond programme was “a tough one” in October. “December? I think we need a couple of good labour reports and evidence of increasing growth, GDP growth. It’s probably going to take a few months to sort that out,” he said.
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