By Ann Saphir

(Reuters) – U.S. employment likely accelerated last month as the effects from the COVID-19 surge started to subdue. However, even a second consecutive weak employment report, it would not derail Federal Reserve’s efforts to reduce its economic support.

Data from companies that track work patterns shows that the outcome is in line with the U.S. Labor Department’s September nonfarm payrolls report. This data was collected by firms ahead of Friday’s U.S. Labor Department release of the September nonfarm payrolls reports. It matches the median estimate for a gain in employment of 500,000 according to a Reuters poll. That may prove to be enough.

Fed Chair Jerome Powell said last month that policymakers were in agreement to start reducing U.S. central banking’s monthly asset purchases of $120 billion as early as November. As long as Powell’s September U.S. employment report is, Powell stated, “decent.” Even Fed President Neel Kazhkari of Minneapolis, and Charles Evans of Chicago have expressed their willingness to follow the timetable for reducing quantitative easing that was put into place in order to stop the economic decline resulting from the coronavirus pandemic.

Lydia Boussour from Oxford Economics, the lead U.S economist said that “we think the bar will be set for QE tapering as long as there is a payroll print above zero.” Boussour projects that 384,000 additional jobs will be created in the next month.

In mid-September, the most recent surge in U.S. Coronavirus cases reached its peak. The impact of the coronavirus cases on September’s job growth are not clear. According to Reuters, the September overall job growth estimate is 250,000. The highest figure is 700,000.

ADP National Employment Report, despite having a bad track record in predicting Labor Department’s reports but providing some clues, showed that private payrolls increased by 568,000 last month. That beat economists expectations.

Payroll data from Homebase https://joinhomebase.com/data showed a 5% decline in employment in September among the 50,000 small businesses it tracks, but it said the drop was likely due to seasonal effects rather than underlying weakness.

The UKG, the payroll management company, released a report showing that shifts by U.S. employees increased in September after decreasing in August. UKG Vice-President Dave Gilbertson indicated that this is consistent with economists’ current estimations of last month’s job growth.

Graphic: Shifts worked still subpar, https://graphics.reuters.com/USA-ECONOMY/zjvqkjryrvx/chart_eikon.jpg

The decline in hours worked in the hospitality and leisure sectors was likely attributable to people quitting in-person work when it is possible because of concerns about the virus.

Gilbertson also noted that manufacturing employment rose less than normal in September. This could be due to supply chain bottlenecks, which may have a negative impact on the sector’s ability to sell during the holiday season.

He stated that although we know it didn’t increase in the manner people had hoped, it was still a steady rate and there wasn’t a crash.

VIRUS ECONOMY

According to the U.S. Centers for Disease Control and Prevention, daily COVID-19 infection rates will continue to decline in the coming weeks. Many economists believe that this would lead to job growth which will accelerate as the year goes on.

Aneta MARKOWSK, Jefferies (NYSE :), economist, expects Friday’s report would show a general gain of 300,000 jobs. A decline in leisure jobs and retail jobs will be reported. These figures reflect some people’s unwillingness to take on high-contact work during recent COVID-19 case increases.

Graphic: September slump?, https://graphics.reuters.com/USA-ECONOMY/lbpgngklyvq/chart_eikon.jpg

Markowska expects this to change in light of the fall in cases. This week, Markowska wrote, “Restaurant and domestic flight bookings as well as hotel occupancy/rates appear to be at a bottom. We expect more gains as offices reopen and business travel resumes. Personal travel will pick up around holidays.”

A paper https://www.chicagofed.org/publications/chicago-fed-letter/2021/461 by Chicago Fed researchers published this week injects a note of caution into that projection.

Scott Brave (an economist) and his coworkers looked at how COVID-19 vaccines had been protecting the labor market against the adverse effects of recent increases in cases.

They found that the positive effects of increasing vaccination rates had outweighed the adverse impacts of the current resurgence of the virus through September.

Brave indicated that while vaccinations seem to have “winned the race” in the next few months, the employment market benefits are already at a standstill and may be reduced if there is a second coronavirus outbreak later this year.