Jobs Report Shows a Slowdown in Economic Growth
After the release of a disappointing jobs report, the US market generates just 235,000 jobs as the global economy shows clear signs of slowing growth.
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- Disappointing jobs data stokes fears of a global economic slowdown
- The US Federal Reserve could offset plans for tapering at its September meeting
The growth of the US economy slowed significantly in August as employers struggled to maintain the steady pace of hiring that has recently supported the economic rebound. The world’s biggest economy added 235,000 new jobs last month, the Labor Department revealed on Friday. The number was way below estimates for 720,000 new positions. The disappointing number arrived after a monthly payroll gain of 1.1 million, revised upwardly from 943,000, for the month of July. The unemployment rate ticked lower to 5.2%, from 5.4% in July.
The slowing pace of labor market growth was attributed to the sharp rise in Delta virus cases along with workers’ demands for higher wages. Employers across the US have increased wages by 0.6% from July and 4.3% from a year ago.
Hiring last month was particularly strong for warehousing, manufacturing, and finance. On the other hand, the services sectors suffered the biggest pullback as businesses and employees are still wary of in-person interaction due to the continued Covid-19 threat.
Bitcoin and Major Cryptocurrencies End Friday in the Green
The retail sector lost 29,000 jobs in August, while the employment in leisure and hospitality ended the month flat after holding a steady average of 350,000 new jobs per month for the last six months. Restaurants also highlighted the effect of the pandemic on businesses as they lost a total of 42,000 jobs over the last month.
The sharp slide in jobs for August is likely to offset the Federal Reserve’s plan to start reversing easy-money policies at its September gathering. Fed officials, including Jerome Powell, have signalled they are preparing to start tapering the vast monetary support at any one of the three remaining policy meetings before the end of the year.
Additionally, the disappointing jobs numbers came just a few days before the expiration of enhanced federal unemployment benefits that were introduced as a way to provide stability amid the pandemic. On Sept. 6, an estimated 7.5m unemployed Americans will no longer receive an additional aid of $300 in weekly assistance.
On that note, Goldman Sachs economists anticipate the expiration of enhanced benefits to contribute to a higher number of people joining the labor market. They had estimated that July’s jobs growth could have been higher by 400,000 jobs had the unemployment aid expired nationwide.
Following the weaker-than-expected jobs data, major stock indexes ended mixed on Friday. The S&P500 inched lower by 1.52 points. The Dow Jones Industrial Average also declined on the day, losing 0.2%. The Nasdaq Composite increased modestly by 0.2%.
Overseas, European markets turned lower on Friday as investors feared the August nonfarm payrolls indicated a slowdown in the economic growth. The region-wide Stoxx Europe 600 lost about 0.6% with retail stocks among the worst performers. Moreover, global equities tumbled for the day.
Bitcoin and other major cryptocurrencies finished Friday in the green and continued their uptrend over the weekend. The original cryptocurrency broke above $51,000 on Friday for the first time in nearly four months. Ether, the second-largest token, climbed to a Friday session high of $4,023 but later retreated to a closing price of $3,900.
On Monday, the US stock market will not be open as the country will observe the Labor Day holiday.