[Asia Economy New York=Correspondent Baek Jong-min] It has been confirmed that the US private employment in July fell significantly short of expectations. With the slow pace of employment recovery, attention is focused on whether the Federal Reserve (Fed) will decide to implement asset purchase tapering.
Private employment data processor ADP announced on the 4th (local time) that private employment in July increased by only 330,000. This was less than half of the market expectation of 695,000. It was also a sharp decline compared to the 680,000 increase in the previous month.
It is interpreted that shortages of labor as well as raw materials and supply chain bottlenecks limited job growth. Despite 9.5 million people being unemployed compared to before the COVID-19 pandemic, US companies are complaining that expanding employment is difficult.
ADP's private employment statistics were seen as a preview that the weekly initial jobless claims to be released a day later and the July employment indicators from the Department of Labor to be announced on the 6th may also not be positive.
The Fed has set employment market recovery as a condition for implementing tapering. Fed Chair Jerome Powell said employment indicators must be checked to decide on tapering. Fed Governor Christopher Waller also indicated that if employment increases by more than 800,000 in August and September respectively, tapering could be implemented in October.
The market expects employment to have increased by 880,000 in July. If July employment falls significantly short of 800,000, the possibility of tapering within the year may decrease. The recent spread of the Delta variant of COVID-19 is also a factor that could limit employment growth.
The deterioration of employment indicators immediately affected the New York financial market. The 10-year US Treasury yield fell to 1.127% during the session, reflecting concerns about sluggish economic recovery. A decline in Treasury yields means an increase in Treasury prices.
As of 10 a.m., the Dow Jones Industrial Average fell 0.49%, the S&P 500 fell 0.28%, and the Nasdaq Composite rose 0.07%.
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