In this news, we discuss the U.S. job growth slows; millions experiencing long bouts of unemployment.
WASHINGTON (Reuters) – The US economy created the fewest jobs in five months in October and more Americans are working part-time, underscoring the challenges the next president faces in keeping the pandemic’s recovery on track Seeing as the fiscal stimulus dries up and the new COVID-19 cases explode across the country.
The Labor Ministry’s closely watched employment report on Friday also showed 3.6 million people were out of work for more than six months. Democratic presidential candidate Joe Biden took over as President Donald Trump in the battlefield states of Pennsylvania and Georgia for the first time on Friday, putting him on the brink of winning the White House.
“Initially, the recovery was mind-blowing, but it lost a lot of water,” said Sung Won Sohn, professor of economics at Loyola Marymount University in Los Angeles. “In the absence of fiscal stimulus and the resurgence of the coronavirus, job gains will be more difficult to achieve in the future.”
Non-farm payrolls increased by 638,000 jobs last month after increasing by 672,000 in September. It was the smallest gain since the employment recovery started in May and left employment 10.1 million below its February peak.
Employment was dragged down by the departure of 147,000 temporary workers hired for the 2020 census. An increase of 271,000 jobs in leisure and hospitality accounted for about two-fifths of the increase in payrolls last month. Employment in professional and business services increased by 208,000, about half of which were in temporary help services. Manufacturing created 38,000 jobs, while construction payrolls increased by 84,000.
The loss of temporary census jobs and further layoffs in cash-strapped state and local governments have reduced government-wide jobs by 268,000. Economists polled by Reuters predicted a payroll increase of 600,000 jobs in October.
Although the private wage bill increased by 906,000 last month, the recovery in the labor market still has a long way to go.
“Employment is still only at its end-2015 level,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. “And at the rate of October, it would take about 16 months for employment to return to its pre-pandemic level.”
Graphic: UNEMPLOYMENT – JOBS – FLAT VERSIONS –
Instant View: US job growth slows in October, unemployment rate drops
A contested election reduces the chances of another government coronavirus bailout this year. Even if more fiscal stimulus is agreed, it is likely to be smaller than what was expected before the election.
This shifts the spotlight on the Federal Reserve. The US central bank kept interest rates near zero on Thursday. Fed Chairman Jerome Powell acknowledged that the pace of the improving economy and labor market had moderated, noting that the recovery would be stronger with more fiscal support.
“The Federal Reserve is going to end up doing more stimulus rather than cutting it,” said James Knightley, chief international economist at ING in New York. “This is especially true if political tensions remain high and hamper a rapid budget response.”
Wall Street stocks were trading lower. The dollar slipped against a basket of currencies. US Treasury prices have fallen.
INCREASE IN PART-TIME WORKERS
More than $ 3 trillion in government coronavirus aid for businesses and workers fueled a historic annualized economic growth rate of 33.1% in the third quarter. This followed a record contraction rate of 31.4% in the April-June quarter.
The lack of fiscal stimulus and the surge in new coronavirus infections put the economy on a significantly slower growth path as the fourth quarter approaches. Restaurants and gyms have moved outside, but cooler weather and the resurgence of COVID-19 infections could leave many struggling.
Even if state and local governments don’t impose new restrictions on businesses, consumers are likely to stay away fearing exposure to respiratory disease. The United States on Wednesday set a one-day record for new coronavirus cases with at least 102,591 infections, according to a Reuters tally.
Although small and medium-sized businesses have suffered the most from the pandemic, large businesses have not been spared. Exxon Mobil announced 1,900 layoffs in the United States last month. Boeing said it expects to cut around 30,000 jobs, 11,000 more than planned, by the end of 2021.
The unemployment rate fell to 6.9% from 7.9% in September. But it continued to be biased by people mistakenly classifying themselves as “employed but absent from work”. Without this recurring mistake, the government estimated that the unemployment rate would have been around 7.2% in October.
The number of people unemployed for more than six months rose by 1.2 million in October. There were 6.7 million people working part-time for economic reasons, reflecting reduced hours due to lack of work or business conditions. This was 383,000 more than in September.
The share of the permanently unemployed rose to 40.9% in October, from 35.6% the previous month.
“A growing share of temporary layoffs is becoming permanent, signaling the long-term scarring effects of the crisis,” said Kathy Bostjancic, chief US financial economist at Oxford Economics in New York.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
Original © Thomson Reuters
Originally posted 2020-11-06 10:46:12.