US jobs data suggests economic recovery stalling before shutdown

http://www.theguardian.com/world/2013/oct/22/us-jobs-data-economic-recovery-shutdown

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Even before the shutdown in Washington, the US economy was struggling. That was the message from the September payrolls data, which showed the world's biggest economy having difficulty creating jobs. Employment was up but by far less - 148,000 - than expected, and well below what is usual for this stage in a recovery.

Little comfort should be taken from the small fall in the jobless rate to 7.2%, which needs to be set against a labour participation rate that was flat on the month at just over 63%, but three percentage points lower than it was before the financial crisis and four points lower than the peak at the end of the 1990s.

The Federal Reserve has said it will look closely at the state of the US labour market before deciding to start scaling back the amount of stimulus it is providing. At present there is no sign of the "clear evidence of a sustained improvement" that the central bank is looking for. That would require an increase of more than 200,000 in non-farm payrolls over several months and a fall in the jobless rate that was not the result of discouraged job seekers giving up hope of finding employment.

Jobless data for both October and November will be heavily distorted by the shutdown, so it will probably be the new year before the Fed gets some reliable information about the state of the labour market. Even if the December figure is good, it will hardly provide clear evidence of a sustained improvement, so it is hard to see any tapering away of the stimulus before March 2014 at the earliest.

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