Huge U.S. jobs miss, but don’t get too gloomy - ING

James Knightley, the Chief International Economist at ING, offers his view on the latest U.S. jobs data.

"We have a huge downside miss for non-farm payrolls in August, coming in at 235k versus 733k consensus. There were 133k of upward revisions, but it is still far weaker than hoped. Coupled with the resurgence of Covid it likely removes any chance of a Fed September taper, but November still looks good."

"Rising Covid cases have clearly impacted industries such as leisure and hospitality given the numbers we have seen on restaurant bookings and air travel and it is also evident in today’s labour data with a net zero jobs in this sector created last month. Retail fell 29k while construction, government and temporary help supply were down a fraction."

"However, before we get too gloomy we need to acknowledge that the household survey tells a better story with the unemployment rate dropping to 5.2% from 5.4% with household employment rising 509k. Meanwhile wages surged 0.6% month-on-month/4.3% year-on-year."

"As for the Fed taper, Fed Chair Powell remains more cautious than many of his colleagues with the resurgence of Covid leading him to warn against implementing an “ill-timed policy move” at last week’s Jackson Hole Symposium. Another of his key quotes was “we have much ground to cover to reach maximum employment” before the Fed can say “substantial further progress” condition has been met. After today’s soft figure employment does indeed remain 5.33mn below the February 2020 peak so this will likely dampen the enthusiasm from several regional Fed Presidents for a September taper. Given our reasons for optimism November looks a decent date for that announcement with a December start point."