(Reuters) – The U.S. Employment Index fell in September due to a drop in government payrolls. However, hiring will likely pick up as COVID-19 infection subsides and people resume their search for work.

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MARKET REACTION:

STOCKS: S&P e-mini futures initially dipped, but then recovered and were last up 0.2%.

BONDS: Last year, the yield of the 10-year benchmark note fell to 1.57%.

FOREX: It fell, and it was down last 0.18

COMMENTS

RICK MECKLER, PARTNER, CHERRY LANE INVESTMENTS, NEW VERNON, NEW JERSEY

“I believe we’re at a weird place right now in the market. Investors are concerned about the rate rise too fast. We also have concerns about the economy’s weakness. You probably know that only one of these is true.

“It’s been consistent for many years now that the individual numbers of any given year, other than extreme outliers have little to no impact on short-term policy. The Fed believes that a consistent and well-telegraphed policy is the best way to keep markets stable.

“I think I am optimistic about the future growth. “But I’m not surprised, and the Fed should be surprised at the current condition that is somewhat weaker than one would expect given the progress made since the bottom of the pandemic.”

SCOTT ANDERSON CHIEF ECONOMIST, BANK of THE WEST SAN FRANCISCO

“I think it just barely clears Powell’s hurdle of “decent”. Still, I believe that a Fed taper announcement in November is the best option.

The FOMC taper timing shouldn’t be based on one point of economic data. The Fed will take into consideration a broad cross-section of data, including inflation, wage growth, and labor shortage issues.”

SCOTT BROWN CHIEF ECONOMIST RAYMOND JAMES ST. PETERSBURG FLORIDA

Although the base value falls short of expectations, it still shows some promise. The gains we had in education were more modest so the seasonally adjusted decline was evident. There is also a lot noise as it’s the beginning of school year, which can cause volatility.

It is consistent with job growth. Tapering is justified by the Fed’s continued improvement in the labor market. All of this adds to the evidence. While it might not be as solid as we expected, it still shows signs of improvement.

Markets really struggle to see beyond the headline figure, but this issue is seasonal adjusted with education. While it might still be disappointing, it’s only one month.

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“These numbers are disappointing. This is due to the declining participation rate (labor market), which explains why unemployment rates fell. The bottom line is that this data is not reliable.

“This is a disappointing number and it’s being accompanied by higher wage costs and that’s pointing to higher wage inflation down the road. It’s not likely to derail the Fed’s tapering.”

(Regarding the drop in government payrolls): “Maybe it’s because the government has mandated vaccines, it’s possible that a lot of government workers left because of that, but that’s a long shot.”

“The Delta variant is a wild card and it’s proven to be a hidden factor in the employment data. Even though the schools remain open and parents return to work, there are still a lot people who are missing from our workforce. But it might be preventing some people from returning to the workforce.”

SHAWN CRUZ SENIOR MARKET STRATEGIST, TD AMERITRADE JERSEY CITY NEW JERSEY

“It looks like the bulk of that hit actually came out of the government sector, government lost 123,000 and the bulk of that was actually in local government in education. You can also see a drop in education, health, and residential care services if you only look outside of government. It was interesting to see where some of these drops were actually coming from but if you are looking at some of the other areas, construction had a slight gain but hasn’t really moved too much either and the leisure and hospitality sector had a little bit of an increase but I don’t think anything to write home about. So this is pretty much a fairly soft report across the board.”

“I don’t know that this really puts the Fed in a very good spot for having a clear-cut way to go out there and start tightening policy, at least the way this report is looking. The one caveat that could come with this report is the survey week is early September and that is where we were still having some pretty major concerns with the Delta variant.”

(Compliled by the global Finance & Markets Breaking News team)