WASHINGTON, Oct 31: U.S. Private-sector employers hired the fewest workers in six months in October while tepid domestic demand kept inflation benign last month, suggesting the economy was still in need of stimulus from the Federal Reserve.
The slowdown in private job growth was the latest signal that the labor market has taken a step back in recent months and the clearest indication yet that a 16-day federal government shutdown weighed on economic activity.
Fed officials stuck to their monthly $85 billion bond-buying pace at the end of a two-day meeting on Wednesday and said fiscal policy was restraining economic growth.
‘It (data) suggests accommodative policy might be necessary for longer and more aggressive monetary policy might be needed to break the lack of momentum in the economy,’ said Laura Rosner, an economist at BNP Paribas in New York.
Employers in the private sector added 130,000 new jobs to their payrolls this month, the ADP National Employment Report showed on Wednesday. That was the lowest reading since April and was below economists’ expectations for a gain of 150,000 jobs.
It was the fourth straight month that private jobs growth slowed, according to the ADP data. There was a marked slowdown in hiring by small businesses, where payrolls increased 37,000 last month, well below the 68,000 new jobs created in September.
Mid-sized firms also hired fewer workers than in September.
‘The government shutdown and debt limit brinkmanship hurt the already softening job market in October,’ said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania.
Moody’s Analytics is a joint developer of the ADP report.
While the ADP data does not have a good track record of predicting the government’s more comprehensive non-farm payrolls count, it suggested that report will find weakness as well.
The government will publish its closely watched payrolls report on Nov. 8. Payrolls gained 148,000 in September, with the unemployment rate hitting a near five-year low of 7.2 percent.
But if average monthly jobs growth continues at less than 150,000, where it has been over the last three months, that would make it difficult for the jobless rate to fall further.
In a separate report, the Labor Department said its Consumer Price Index increased 0.2 percent last month as a rebound in energy prices offset an unchanged reading in food costs. The CPI had edged up 0.1 percent in August.
In the 12 months through September, the CPI increased 1.2 percent, the smallest gain since April. (agencies)
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