Slowing U.S. job growth leaves nearly 4 million Americans permanently unemployed

In this news, we discuss the Slowing U.S. job growth leaves nearly 4 million Americans permanently unemployed.

WASHINGTON (Reuters) – US job growth slowed more than expected in September and more than 300,000 Americans lost their jobs permanently, dealing a potential blow to President Donald Trump ahead of the hotly contested presidential election November 3.

The Ministry of Labor’s closely watched employment report on Friday underscored the urgent need for additional fiscal stimulus to help the economy recover from a recession triggered by the COVID-19 pandemic. The slowdown in hiring compounds problems for Trump, who announced overnight that he had tested positive for coronavirus.

Just over half of the 22.2 million jobs lost during the pandemic have been recovered. Former Vice President Joe Biden, Democratic Party candidate, attributes the economic crisis to the White House’s handling of the pandemic, which has killed more than 200,000 people and infected more than 7 million people nationwide.

“The jobs report adds to Trump’s woes,” said James Knightley, chief international economist at ING in New York. “The betting odds indicate a decreased odds of him winning re-election and a much higher probability of a Democratic net sweep.”

Non-farm payrolls increased by 661,000 jobs last month, the smallest gain since the job recovery began in May, after advancing 1.489 million in August. Every sector added jobs except the government, which cut 216,000 jobs due to the departure of temporary workers hired for the census and layoffs in state and local education departments as many school districts are switching to online learning.

Leisure and hospitality employment increased by 318,000, almost half of the increase in non-farm employment in September. The wage bill is 10.7 million below their pre-pandemic level. Economists polled by Reuters had forecast that 850,000 jobs were created in September. Job growth peaked in June when the payroll jumped to a record 4.781 million jobs.

The unemployment rate fell to 7.9% in September, with 695,000 people leaving the labor force after 8.4% in August. The unemployment rate was again skewed by people mistakenly classifying themselves as “employed but absent from work”.

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Without this error, the government estimated that the unemployment rate would have been around 8.3% in September. There were 3.8 million people who had lost their jobs permanently, 345,000 more than in August. More people experienced long spells of unemployment, with the number of people unemployed for more than 27 weeks jumping from 781,000 to 2.4 million.

The slowing labor market recovery is the strongest sign to date that the economy has slipped into lower gear as the fourth quarter approaches. Growth was boosted this summer by the fiscal stimulus. Estimates of gross domestic product growth for the third quarter exceed an annualized rate of 32%, which would reverse a historic rate of contraction of 31.4% in the April-June quarter.

Growth estimates for the fourth quarter have been reduced to around 2.5%, from over 10%.

“The virus is in the driver’s seat to control the speed of the recovery and at the moment the economy is on the slow lane unless Congress and the White House can settle their differences and provide additional stimulus,” Chris said. Rupkey, chief economist for MUFG in New York.

Wall Street shares fell. The dollar appreciated against a basket of currencies. US Treasury prices were lower.

WOMEN LEAVING THE WORKFORCE

The Democratic-controlled House of Representatives on Thursday approved a $ 2.2 trillion bailout. Objections from leading Republicans risk damaging the plan in the Senate.

New cases of the coronavirus are on the rise, with a surge expected in the fall, which could result in some restrictions being imposed on companies in the service sector. Political uncertainty is growing and could extend beyond elections and make companies cautious about hiring.

Walt Disney Co. announced this week that it will lay off about 28,000 employees in its theme park division. American Airlines and United Airlines, two of the largest US carriers, said they began laying off more than 32,000 workers on Thursday, in the absence of government assistance.

While many now suffer from long spells of unemployment, economists estimate that the unemployment rate will not see its pre-pandemic level of 3.5% until mid-2024 and that it could take a year to recoup lost jobs during the pandemic. This could further widen the income inequality gap.

The COVID-19 crisis has disproportionately affected the low-income population and women, who have left the workforce to care for children.

In September, the participation rate, or the proportion of working-age Americans who have or are looking for a job, fell to 61.4% from 61.7% in August. The participation rate for women fell from 56.1% to 55.6%. It has changed little for the men.

“It may very well be that more home schooling is putting gradual downward pressure on the labor force participation rate, which fell sharply further in September for women,” said Robert Rosener, economist at Morgan Stanley in New York.

Last month, retailers created 142,000 jobs and health and social employment increased by 108,000. Manufacturing payrolls increased by 66,000 when hiring in construction sites increased by 26,000.

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci

Original © Thomson Reuters

Originally posted 2020-10-04 03:26:12.

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