U.S. job growth likely accelerated in September as the summer wave of COVID-19 infections began to subside, fueling demand for high-contact services like dining out, and positioning the Federal Reserve to start scaling back its monthly bond buying.
The Labor Department's closely watched employment report on Friday would also suggest that an apparent sharp slowdown in economic activity in the third quarter was probably temporary. Still, the labor market and broader economy remain constrained by worker and raw material shortages, wrought by the pandemic.
According to a Reuters survey of economists, nonfarm payrolls likely surged by 500,000 jobs last month, which would leave the level of employment about 4.8 million jobs below its peak in February 2020.
September's employment report is the only one available before the Fed's Nov. 2-3 policy meeting. The U.S. central bank signaled last month that it could start tapering its monthly bond buying as soon as November.
Fed Chair Jerome Powell told reporters that "it would take a reasonably good employment report" to meet the central bank's threshold for reducing its massive bond buying program.
Economists expect that criteria will be met in the September report, which is also expected to show the unemployment rate falling to 5.1% from 5.2% in August.
The likelihood of a taper was bolstered by the U.S. Senate taking a step on Thursday to raise the Treasury Department's borrowing authority until December.
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