Analysts Question Taper Timeline Following Jobs Report

Though the ""national unemployment rate"":https://themreport.com/articles/aug-payrolls-up-169k-unemployment-rate-dips-2013-09-06 continued to fall in August, disappointing payroll numbers over the last several months have analysts wondering what the latest jobs report might mean for the Federal Reserve's plan to taper its monthly asset purchases.

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According to Friday's report from the Bureau of Labor Statistics (BLS), non-farm payrolls increased by 169,000 last month, slightly shy of the 180,000 consensus forecast. More disappointing, however, was the decline in June and July's revised payrolls, which dropped a cumulative 74,000. The declines also brought the latest three-month average to 148,000, the weakest since the same period last year.

The six-month average has also experienced a steady decline, according to calculations from ""Capital Economics"":https://www.capitaleconomics.com/.

""As it stands now, that average isn't much higher than it was a year ago when the Fed felt it necessary to launch QE3,"" commented Paul Ashworth, chief U.S. economist for the firm.

At the same time, while the unemployment rate now stands almost a full percentage point down from August 2012's 8.1 percent, a large factor behind that decline is the sizable drop in the labor force, which in August fell 312,000.

""So the Fed can point to a marked decline in the unemployment rate over the past year, but some of that decline has been achieved because job seekers are giving up and leaving the labour force,"" Ashworth said, noting that August's participation rate was at a 35-year low of 63.2 percent.

With the rest of the report showing ""broadly positive"" news (as hourly earnings and hours increase), Ashworth says the overall news could be used in equal measures as evidence for and against an immediate tapering of the Fed's purchasing program--which may begin at the next meeting of the Federal Open Market Committee (FOMC) in September.

""Overall, with other indicators like initial jobless claims pointing to a strengthening labour market and the activity surveys indicating a pick-up in economic growth, we still expect the Fed to go ahead with the taper later this month,"" he said.