America’s jobs market toiling
washington — US employers hired the fewest workers in five months in October, offering the clearest evidence yet that the end of fiscal stimulus and exploding new Covid-19 infections were sapping momentum from the economic recovery.
Nonfarm payrolls increased by 638,000 jobs last month after rising by 672,000 in September, the Labour Department said in its closely-watched employment report on Friday. That was the smallest gain since the jobs recovery started in May and left employment still well below its peak in February. The unemployment rate fell to 6.9 per cent from 7.9 per cent in September. Economists polled by Reuters had forecast payrolls advancing by 600,000 jobs in October and the jobless rate dipping to 7.7 per cent.
The report underscored the challenges the next president, whether it is incumbent Republican Donald Trump or Democrat Joe Biden, confronts to keep the economy growing as it heals from the deepest recession since the Great Depression. Biden edged closer to winning the White House early on Friday as he took a narrow lead over Trump in the battleground state of Georgia.
The economy is on its own against the virus...a virus surge means economic uncertainty for businesses. Until that uncertainty is eliminated, the labour market will struggle to return to what it used to be
AnnElizabeth Konkel, economist at Indeed
65% of Americans who were temporarily laid off in the spring were back at work by September. But just 40% of workers whose jobs had been eliminated were able to find other jobs. Stephanie Aaronson and Wendy Edelberg, Fellows at Brookings Institution
Trump on Thursday alleged fraud without providing evidence, filing lawsuits and calling for recounts in a race yet to be decided since polls closed on Tuesday.
Still, the nation now has 10.1 million fewer jobs than it did before the pandemic intensified in March.And the job market and the overall economy are under intensified pressure from the accelerating pandemic. On Thursday, the nation broke another record in the seven-day rolling average for new cases, hitting nearly 90,000. Daily new cases were also on track for another day above 100,000.
Friday’s report follows the expiration of government stimulus for struggling individuals, businesses and state and local governments and the failure of Congress to provide further aid.
That stimulus included $1,200 checks that were sent to most adults in the spring and a $600-a-week federal jobless benefit that expired in July. That was followed by an additional $300 that lasted through mid-September. A study by JPMorgan Chase found that Americans spent roughly two-thirds of such money by the end of August. “The economy is on its own against the virus,” said AnnElizabeth Konkel, an economist at the job-posting website Indeed.
“Accelerating cases are an everpresent threat during winter, and a virus surge means economic uncertainty for businesses. Until that uncertainty is eliminated, the labor market will struggle to return to what it used to be.”
A contested election reduces the chances of another coronavirus rescue package from the government this year. Even if more fiscal policy is agreed on, it will likely be smaller than had been anticipated before the election.
That shifted the spotlight to the Federal Reserve. The US central bank kept interest rates near zero on Thursday.
More than $3 trillion in government pandemic relief for businesses and workers fueled a historic 33.1 per cent annualised rate of economic growth in the third quarter. That followed a record 31.4 per cent pace of contraction in the April-June quarter.
Lack of fiscal stimulus and spiraling new coronavirus infections across the country have put the economy on a sharply slower growth path heading into the fourth quarter. Restaurants and gyms have moved outdoors, but cooler weather and the resurgence in Covid-19 infections could leave many in trouble.
Economists say they fear that many who have dropped out of the workforce or who face permanent job losses will suffer an erosion of professional skills and personal networks. That will make it harder for them to find work again.
Research by Stephanie Aaronson and Wendy Edelberg, fellows at the Brookings Institution, found that 65 per cent of Americans who were temporarily laid off in the spring were back at work by September. But just 40 per cent of workers whose jobs had been eliminated were able to find other jobs.
Many people who have dropped out of the workforce would be willing to work if a job were offered or if more were available. But only nine per cent of them had found jobs four months later.
And though small and mediumsized businesses have suffered most from the pandemic, large corporations have not been spared.
At least 21.5 million people were receiving unemployment benefits in mid-October. Many people, mostly women, have dropped out of the labor force to look after children or because they fear contracting the virus. —