Slow jobs growth in the US as debt crisis deepens
Plans to begin weaning the US off its multi-billion dollar monthly quantitative easing (QE) fix could be pushed back in to the new year after sluggish employment data suggested recovery had stalled – in a hangover from the recent budget crisis.
The addition of only 148,000 new jobs in September, against expectations of 180,000, led global markets, propped up by QE since the financial crisis, to expect that 'tapering' of the stimulus programme would be kicked in to the long grass.
Shares climbed strongly because, perversely, poor jobs data in the world's largest economy is interpreted as making it more likely the US Federal Reserve will continue its $85bn (£52bn) a month bond purchases at the same level.
Publication of the data had been delayed after a 16-day partial government shutdown earlier this month, when political wrangling in Washington left Congress and the White House unable to reach a budget deal.
The slowdown in hiring appears to suggest employers held back on taking on new workers as a deadline for reaching agreement neared and the likelihood of the shutdown loomed.
The new figures showed unemployment fell from 7.3% to 7.2%. However the percentage of Americans working or looking for work remained at a 35-year low.
It is thought likely the shutdown itself will have further slowed jobs growth, with temporary lay-offs of federal workers and government contractors likely to depress October's job figures.
Politicians on Capitol Hill last week reached a last-minute deal to end the stoppage, as well as averting the even more catastrophic prospect of America missing a deadline to extend its borrowing limit – and defaulting on its debts.
But the full effects of the crisis on the economy are not yet known.