U.S. NFP data misses expectations, likely to delay Fed tapering

(Reuters) – U.S. employers added far fewer workers than expected in September, suggesting a loss of momentum in the economy that will likely add to the Federal Reserve’s caution in deciding when to trim its monthly bond purchases.

Nonfarm payrolls increased by 148,000 workers last month, the Labor Department said on Tuesday. While the job count for August was revised higher, employment gains in July were revised lower and were the weakest since June 2012.

Economists polled by Reuters had expected the economy to add 180,000 jobs in September.

“This report on the labor market will soften people’s assessments of current conditions,” said Cary Leahey, a senior economist at Decision Economics in New York.

But there was a silver lining in the report. The unemployment rate dropped a tenth of a percentage point to 7.2 percent, the lowest level since November 2008.

Prices for U.S. government debt rose, while the dollar fell against the euro and the yen. Stocks rose as investors welcomed the prospect of continued monetary stimulus from the U.S. central bank, pushing the Standard & Poor’s 500 index to a record intraday high.

The closely watched employment report was released more than two weeks later than originally scheduled because of the partial shutdown of the federal government earlier this month.

Signs the economy lost steam even before the acrimonious budget fight could convince the Fed to hold off any decision on scaling back its bond-buying stimulus until the extent of the economic damage from the fiscal standoff is clear.

Economists estimate the 16-day government shutdown shaved as much as 0.6 percentage point off annualized fourth-quarter gross domestic product, through reduced government output and damage to both consumer and business confidence.

Fed officials will meet next Tuesday and Wednesday to discuss monetary policy. They surprised markets last month by sticking to their $85 billion per month bond-buying pace, saying they wanted to see more evidence of a strong recovery.