US September Employment 'Shock'... Concerns Over Economic Recovery Slowdown

190,000 Jobs Added in September... Falls Short of Expected 500,000 Increase
Labor Shortage and Supply Chain Collapse Hinder Employment Growth
Unemployment Rate Falls, Wages Rise
New York Stock Market Weakens, Bond Yields Rise

[Asia Economy New York=Correspondent Baek Jong-min] U.S. employment once again fell significantly short of expectations, raising concerns about a slowdown in economic recovery. Although the New York stock market closed lower due to the shock from the employment data, U.S. Treasury yields continued their upward trend, surpassing 1.6%.

[Image source=AP Yonhap News]

The U.S. Department of Labor announced on the 8th (local time) that nonfarm payrolls increased by 194,000 in September. This result was less than half of the Dow Jones consensus market expectation of a 500,000 increase. It was the smallest monthly increase so far this year.

Expectations for strong September employment faded after previously released ADP private employment data and weekly initial jobless claims came out positively.

The unemployment rate fell from 5.2% in the previous month to 4.8%, better than the market expectation of 5.1%. Hourly wages rose by 0.62%.

The Wall Street Journal (WSJ) diagnosed that labor shortages are hindering employment growth. WSJ evaluated the Delta variant and worker shortages as signals putting pressure on economic recovery. Some pointed out that government sector employment related to school reopening falling far short of expectations was a cause of the employment slump. The supply chain disruption situation was also interpreted as a factor blocking job growth.

Michael Pearce, Chief Economist at Capital Economics, explained, "Most experts expected the labor market to have improved, but in reality, it was deteriorating," calling it a considerably worrisome situation.

There are also positive forecasts. Professor Son Seong-won of Loyola Marymount University predicted, "This survey was conducted in early September. Since then, Delta variant infections have decreased, so companies are expected to increase hiring ahead of the year-end shopping season." Professor Son also interpreted that companies still struggling to fill vacancies is a reason why employment expansion will continue.

Goldman Sachs forecasted that although the September employment data was disappointing, the falling unemployment rate and rising hourly wages suggest that the Federal Reserve (Fed) will decide to taper asset purchases at the November FOMC meeting.

Professor Son also analyzed that the September employment slump is a small shock that can be encountered during the economic recovery process and predicted that tapering will proceed as scheduled.

With the slowdown in economic recovery and rising Treasury yields coinciding, major indices on the New York stock market declined. The Dow Jones Industrial Average fell 8.69 points (0.03%) to 34,746.25, the S&P 500 index dropped 8.42 points (0.19%) to 4391.34, and the Nasdaq index slid 74.48 points (0.51%) to close at 14,579.54.

The yield on the U.S. 10-year Treasury note rose to the 1.60% range. Experts analyzed that Treasury yields rose as the U.S. Congress agreed on a temporary increase in the debt ceiling.