US jobs recovery cools in shadow of Delta variant

Bloomberg

A likely moderation in US hiring in the monthly employment report will give policy makers a measure of the health of the labour market and the threat posed by the delta variant of the coronavirus.
The US probably added 750,000 jobs in August, a slowdown from June and July but well above the pace seen earlier this year, according to the median of economists’ forecasts.
The outcome will inform Federal Reserve officials gauging the economy as they look to wind down stimulus later this year. Fed Chair Jerome Powell, acknowledging that a taper in bond purchases may be warranted, said last week that the Delta variant “remains a near-term risk,” though prospects towards maximum employment are good.
“The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the delta variant,” he said during a virtual speech at the Kansas City Fed’s annual Jackson Hole symposium. “We will be carefully assessing incoming data and the evolving risks.”
While job growth has been improving, labour-force participation — the share of Americans either working or looking for work — has been stuck near the lowest level since the 1970s for nearly a year.
Forecasters had expected that high vaccination rates and the reopening of schools would help bring workers back into the labour force this fall, but the rapidly spreading Delta variant could shift that outlook as health concerns grow and some schools delay in-person instruction.
Ahead of the jobs report, private payrolls data from the ADP Research Institute on Wednesday could give an indication of the pace of hiring. The week will also bring data on pending home sales and manufacturing.
Elsewhere, a likely spike in euro-zone inflation, gross domestic product reports in Canada, Australia and India, and a possible interest-rate increase in Chile will all feature among the other big economic reports in the next days.
Meanwhile, Chile unleashes its end-of-month data torrent — industrial output, copper production, unemployment, retail sales and manufacturing — ahead of the central bank’s monthly meeting. A rapidly heating economy and over-target inflation has analysts expecting at least a quarter-point increase here to push the key rate up to 1%.
In Mexico, the central bank’s quarterly inflation report is keenly awaited, especially after the surprisingly dovish minutes of the bank’s Aug. 12 meeting appeared to put a rate pause on the table.