U.S. job growth likely accelerated in September as the summer wave of COVID-19 infections began to subside, fueling demand for high-contact services like dining out, and positioning the Federal Reserve to start scaling back its monthly bond buying.
The Labor Department's closely watched employment report on Friday would also suggest that an apparent sharp slowdown in economic activity in the third quarter was probably temporary. Still, the labor market and broader economy remain constrained by worker and raw material shortages, wrought by the pandemic.
Estimates range from as high as 700,000 jobs to as low as 250,000. The economy added 235,000 jobs in August, the fewest in seven months, with hiring in the leisure and hospitality industry stalling. Apart from the Delta variant, a seasonal quirk was also a drag, and economists expect August payrolls will be revised higher in keeping with the trend in past years.
Fed 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 program. "Virtually any payroll gain in excess of August's 235,000 increase would check this particular box for the Fed," said Lou Crandall, chief economist at Wrightson ICAP in New York.Labor market indicators were mixed in September. The ADP National employment report on Wednesday showed stronger-than-expected private payrolls growth last month. The number of people on state unemployment rolls decreased between mid-August and mid-September.
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