In this news, we discuss the U.S. job growth slows in September; permanent unemployment increasing.
WASHINGTON (Reuters) – US job growth slowed more than expected in September and the ranks of the permanently unemployed swelled, underscoring the urgent need for additional fiscal stimulus as the COVID-19 pandemic takes hold perpetuates and threatens the recovery of the economy.
The employment report closely watched by the Labor Ministry on Friday was the last before the hotly contested November 3 presidential election in which the economic legacy of the pandemic was a major problem.
Republican President Donald Trump, who said on Friday he tested positive for coronavirus, is likely to tout the fifth consecutive month of job gains and falling unemployment as a sign of progress for an economy that has plunged into the recession in February.
But employment gains in September were the weakest since the employment recovery began in May and left the labor market far from recouping the 22.2 million jobs lost in March and April, indicating slower growth as the fourth quarter approaches.
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.
Non-farm payrolls increased by 661,000 jobs last month after increasing 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 from 8.4% in August. As in previous months, the unemployment rate has been skewed by people misclassifying themselves as “employed but absent from work”.
Without this error, the government estimated that the unemployment rate would have been around 8.3% in September.
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The drop in the unemployment rate last month reflects people leaving the workforce. There were 3.8 million people who had lost their jobs permanently, 345,000 more than in August.
The Wall Street stock opened lower. The dollar appreciated against a basket of currencies. US Treasury prices were higher.
A further downturn in the labor market is likely. 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.
Several months after the resumption of operations, demand remained weak, especially in the service sector, leading some companies to close permanently or lay off more workers.
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.
Estimates of gross domestic product growth for the third quarter exceed an annualized rate of 32%, reversing a historic contraction rate 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 number of people out of work for 27 weeks or more rose from 781,000 to 2.4 million in September. 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.
This risks further widening the income inequality gap. The COVID-19 crisis has disproportionately affected the low-income population. At least 26.5 million people were receiving unemployment benefits by mid-September.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
Original © Thomson Reuters
Originally posted 2020-10-03 02:36:11.