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How the Fed could react to August lackluster jobs numbers financial news

by Dragonspear



CNBC’s “Squawk Box” team discusses what the Federal Reserve may do after the August payrolls missed estimates with Judy Shelton, former Fed board nominee. For access to live and exclusive video from CNBC subscribe to CNBC PRO:

Job creation for August was a huge disappointment, with the economy adding just 235,000 positions, the Labor Department reported Friday.

Economists surveyed by Dow Jones had been looking for 720,000 new hires.

The unemployment rate dropped to 5.2% from 5.4%, in line with estimates.

August’s total — the worst since January — comes with heightened fears of the pandemic and the impact that rising Covid cases could have on what has been a mostly robust recovery. The weak report could cloud policy for the Federal Reserve, which is weighing whether to pull back on some of the massive stimulus it has been adding since the outbreak in early 2020.

“The labor market recovery hit the brakes this month with a dramatic showdown in all industries,” said Daniel Zhao, senior economist at jobs site Glassdoor. “Ultimately, the Delta variant wave is a harsh reminder that the pandemic is still in the driver’s seat, and it controls our economic future.”

Leisure and hospitality jobs, which had been the primary driver of overall gains at 350,000 per month for the past six months, stalled in August as the unemployment rate in the industry ticked higher to 9.1%.

Instead, professional and business services led with 74,000 new positions. Other gainers included transportation and warehousing (53,000), private education (40,000) and manufacturing and other services, which each posted gains of 37,000.

Retail lost 29,000, with the bulk coming from food and beverage stores, which saw a decrease of 23,000.

“The weaker employment activity is likely both a demand and supply story — companies paused hiring in the face of weaker demand and uncertainty about the future while workers withdrew due to health concerns,” Bank of America economist Joseph Song said in a note to clients.

The report comes with the U.S. seeing about 150,000 new Covid cases a day, spurring worries that the recovery could stall heading into the final part of the year.

“Delta is the story in this report,” said Marvin Loh, global macro strategist for State Street. “It’s going to be a bumpy recovery in the jobs market and one that pushes back against a more optimistic narrative.”

The month saw an increase of about 400,000 in those who said they couldn’t work for pandemic-related reasons, pushing the total up to 5.6 million.

“Today’s jobs report reflects a major pullback in employment growth likely due to the rising impact of the Delta variant of COVID-19 on the U.S. economy, though August is also a notoriously difficult month to survey accurately due to vacations,” said Tony Bedikian, head of global markets at Citizens.

Still, the news wasn’t all bad for jobs.

The previous two months saw substantial upward revisions, with July’s total now at 1.053 million, up from the original estimate of 943,000, while June was bumped up to 962,000 from 938,000. For the two months, revisions added 134,000 to the initial counts.

Also, wages continued to accelerate, rising 4.3% on a year-over-year basis and 0.6% on a monthly basis. Estimates had been for 4% and 0.3% respectively.

An alterative measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons fell sharply, dropping to 8.9% in August from 9.6% in July.

The labor force participation rate was unchanged at 61.7%, still well below the 63.3% in February 2020, the month before the pandemic declaration.

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21 comments

Daniel Liddiard 06/09/2021 - 4:12 Sáng

I wholeheartedly agree!

Reply
kwai shiu 06/09/2021 - 4:12 Sáng

"Benefit the riches and trash the middle class and the poor," that's the motto of the The land of the Riches, pop

Reply
Iquey 06/09/2021 - 4:12 Sáng

Price of housing is everything.

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Allison Stone 06/09/2021 - 4:12 Sáng

The best strategy to use when trading bitcoin,is to trade with an expert who understand the market as their own farm and make maximum profit.

Reply
garyseeseverything 06/09/2021 - 4:12 Sáng

The fed is our enemy look at how the created mega bubbles everywhere! You will own nothing and be happy

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Eric Jovenitti 06/09/2021 - 4:12 Sáng

What is the right thing I mean America was built on taking rest being conservative in America might not be the right thing CEOs don’t get hired until they fail a conservative rhetoric leads to dogma bondage and a simple life that has extreme constraints so the right thing is relative there’s no way to help everybody if people aren’t proactive if you’re not out reading that monetary policy is advantageous to the stock market enough i’m not investing then that’s just not a software person in the federal reserve doesn’t have the tools to benefit all of society that could be actually legislated in but all of society did get monetary benefits whether you’re rich or poor it just so happens that the Fed is propping up the financial section sector sorry because if the financial sector falls it will bring the economy to a extreme halt in she knows that 100% now you could argue that you shouldn’t be there to begin with anyways and things should be organic but then hit there also shouldn’t be any regulation on anything and everybody should be able to lend out as much as they want whenever they want if because if he’s not going to be a safety net then he also can’t regulate things which leads to human beings being stupid like 2008 so it sounds like this lady has a plan that she’s trying to implement by saying these things

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Eric Jovenitti 06/09/2021 - 4:12 Sáng

I mean she knows the answer to that he can’t raise raise the government wouldn’t be able to afford the debt if interest rates go up rapidly it’ll make the economy even worse and I can’t even believe she’s asking a question she understands it I’m assuming she’s a bond investor trying to create a rhetoric so she can get her return better so she doesn’t actually have to invest in the S&P 500 because she doesn’t know when it’s actually going to get destroyed because she’s not an actual investor I’m speculating here but she knows exactly why he’s doing it because if he pulls the Band-Aid off now it will really hurt the economy you wanna pull it off in an upwards inflection not a downward inflection if we get past the Delta variant and then economy booms again then you pull the Band-Aid off it’s not rocket scientist

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Aleco Glenz 06/09/2021 - 4:12 Sáng

1929 stock market crash

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FinanceInvestNetwork 06/09/2021 - 4:12 Sáng

Funny how stock market keeps raising

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CrescentPrince Kronos 06/09/2021 - 4:12 Sáng

Stop lying lady. If asset prices come down, wages go down with it. The value of a job will always be relative. I'm sorry but if you're low income, you're not buying a house unless you save for a while, raising interest rates will help that.

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Craig Anthony 06/09/2021 - 4:12 Sáng

Your forgetting who the Fed Chairman is. He’s the biggest Wall Street puppet ever. If there is a taper in will be so small it wouldn’t matter. Of course the jobs number sucked. The government is giving people more money to stay home then is being offered by these so called companies looking to hire. Then you also have all these young people with all this free money day trading thanks to the no can lose stock market Powell has created. So now they have free money from the government and from day trading? Why would they work. The whole scene is a joke. Oh I almost forgot to add the mass exodus of mfg jobs to Mexico going on but the news doesn’t want to touch on that fact either. There are many reasons why this country is almost 30 trillion in debt. Very sad!

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Bzilla Whoop 06/09/2021 - 4:12 Sáng

POWELL FOR PRESIDENT 🇺🇸🐂🇺🇸🐂

Reply
Garry Mohr 06/09/2021 - 4:12 Sáng

bitcoin is a opportunities Cryptocurrency is the future, Bitcoin presicely

Reply
Tomy 06/09/2021 - 4:12 Sáng

Humm… All those who are left on the sidelines with cash bags have been talking up Fed tapper / interest rate increase for some time now. They are so desperate and want to pressure Fed to do something to crash the market so that they can get in and buy stocks.. Problem is TV lost credibility

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Gabriel Martinez 06/09/2021 - 4:12 Sáng

Picking winners and losers, the real loser here is the middle class.

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Timothy Ryan 06/09/2021 - 4:12 Sáng

VOTE HER FOR FED!! Shes knows what shes talking about.

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Suplexcity Bitch 06/09/2021 - 4:12 Sáng

people invest

Reply
matt guastella 06/09/2021 - 4:12 Sáng

Why buy the cow , when the milk is free

Reply
Julie Han 06/09/2021 - 4:12 Sáng

Very well said!

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Alexander Gill 06/09/2021 - 4:12 Sáng

I like this lady. She seems like she cares.

Reply
ben mitchypoo 06/09/2021 - 4:12 Sáng

money printer stay going BRRRRRRRRRRRRRRRRRRRRRR!!!!!!!!!!!!!!

Reply

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