Weak U.S. job growth clouds outlook, could delay Fed tapering
The delayed September jobs report clouded the outlook for the U.S. economy, creating a new obstacle for the Federal Reserve to wind down its controversial bond-buying program.
U.S. employers added 148,000 jobs during the month, well below the pace of gains seen in the first half of the year. The unemployment rate, obtained from a separate survey of households, ticked down to 7.2% from August’s 7.3% and offered a glimmer of hope as the drop was due to more people finding work rather than leaving the labor force.
The Labor Department’s monthly job report helped assure investors the Fed will leave its bond-buying program unchanged at its meeting next Tuesday and Wednesday. The weak payroll gains also likely raised the bar for action at the Fed’s mid-December meeting, when central-bank officials may be struggling to assess the economy’s course after months of data muddied by the federal government’s 16-day shutdown.
The prospect of the Fed staying the course on its easy-money policies through year’s end sent the Dow Jones Industrial Average to a one-month high, market participants said. The blue-chip index gained 75.46 points, or 0.49%, to 15467.66 and is once again nearing record territory, and the Standard & Poor’s 500 finished at a fresh record close, up 10.01 points, or 0.57%, at 1754.67. Treasury yields sank to a three-month low on the report. The yield on the 10-year Treasury, which moves in the opposite direction of the price, fell to 2.512%.
What the payroll report makes clear is that “the Fed is not going to taper in December,” said Rajiv Setia, head of U.S. rates research at Barclays PLC.
