Economists believe that the frail back-to-back returns in US payrolls, which represents the weakest gain in three years, are not likely to stop the Federal Reserve from reducing its bond purchases gradually, Bloomberg reported.
According to Labor Department data, hiring increased by 113,000 last month. This was less than the median gain of 180,000 that economists forecasted when polled by Bloomberg. The rise also followed an increase of 75,000 the month before. Unemployment also dropped 6.6% from December's figure of 6.7%, representing the least since October 2008, the report said.
Standard Chartered Bank Economist Thomas Costerg told Bloomberg in an interview, "This is a lackluster report, but it's not enough to take the Fed out of autopilot on tapering." He added that the Fed will look at the economy as a whole and not just the payrolls since the "broad consensus" there leans towards reducing the monthly bond purchases by $10 billion with every policy meeting, the report said.
Barclays Chief US Economist Dean Maki told Bloomberg that Janet Yellen will most likely not announce a change in the Fed's tapering approach next week when she faces lawmakers in her first public comments as the Chairman of the Federal Reserve. She helped former Chairman Ben S. Bernanke come up with the strategy that was meant to prevent market shocks and allow policymakers time to review the condition of the job market, the report said.
Maki said, "The message will be one of continuity." He added that various employment data still signifies "moderate growth."
The data also showed that last month, retailers and government agencies were the ones who reduced payrolls the most in over a year while employment was bolstered by companies in the construction and manufacturing industries, which made up more than half of the gain, the report said.
Meanwhile, private employment increased by 142,000 last month after rising 89,000 in December. This was below the Bloomberg survey median which expected a gain of 185,000, the report said.
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