The US economy created 235,000 jobs in August, a sharp drop from the previous month, indicating that the more contagious variant of the Delta Coronavirus is having an impact on recruitment plans.
The non-agricultural employment data released by the US Bureau of Labor Statistics on Friday showed a sharp slowdown from the 1.1 million post-revision Created work In July, it was well below the 733,000 jobs expected by economists in August. After hovering at 5.4% in July, the unemployment rate dropped slightly to 5.2%.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: “It’s all deltas.” “Even if it’s not worse, September will be similar. I can’t imagine that we will have a turnaround in October… If we go back to 500,000, I Really surprised [gains] Before November. “
According to data from the US Bureau of Labor Statistics, the leisure and hospitality industry did not increase employment opportunities in August, with an average monthly increase of 350,000 jobs in the past six months. Another sign that the Delta variant is having a major impact is that restaurants are laying off 42,000 employees and retailers are laying off 29,000 employees.
According to the Bureau of Labor Statistics, recruitment in the construction industry has failed to pick up, and the employment situation has “not changed much.”
The report shows that employment growth in professional and business services, manufacturing, transportation, and warehousing is “significant”.
This extremely weak employment report was released a few days before the expiration of the increased federal unemployment benefit program Pandemic.
Additional assistance, including an additional $300 a week for unemployed Americans, will expire on September 6, when an estimated 7.5 million workers will lose a key source of support. Covid-19 cases are on the rise At an alarming rate in parts of the country.
Republicans have long believed that these measures are preventing people from returning to the labor market, prompting 25 predominantly conservative states to end increased benefits in the summer.
Goldman Sachs economists estimate that if the nationwide enhancement of benefits expires, employment growth in July will be 400,000 higher, and predict that the termination of next week will increase employment by 1.5 million before the end of the year.
But other economists say that there are many other reasons for the broader shortage in the labor market, including continued concerns about infection with Covid and childcare issues. So far, states that have cut benefits have not seen any noticeable changes in employment trends, and Friday’s report indicated that the shortage of workers remains severe.
The labor force participation rate, which tracks the number of Americans employed or looking for work, did not improve in August, hovering at 61.7%.
Average hourly wage growth exceeded economists’ expectations, an increase of 0.6% from July and a year-on-year increase of 4.3%. Thomas Simons of Jefferies stated that the sharp rise “clearly shows that the demand for labor remains strong, and the biggest obstacle to continued employment growth is the number of available workers.” Economists say this also reflects unemployment in the low-wage leisure and hotel industries.
The weak employment report has dealt a blow to the Biden administration during the difficult times in the White House. The president’s approval rating has declined in recent weeks due to the spread of the Delta variant and the difficult withdrawal of troops from Afghanistan.
“What we are seeing is a lasting and strong economic recovery,” Biden said in a speech at the White House on Friday. “Even so, even if we have made progress, we have not reached the level required for economic recovery.”
The U.S. President urged Congress to pass the next stage of its economic agenda, including a $1.2 trillion bipartisan infrastructure plan, and a $3.5 trillion society funded by tax increases for businesses and the wealthy. Expenditure plan to strengthen economic recovery. But the President of the United States did not hint at new measures to further expand emergency unemployment benefits related to the pandemic.
Friday’s data was also released on the cusp of the Fed’s potential policy shift. The Fed is actively debating the number of stimulus measures it has injected into the financial market.
Some officials called on the Federal Reserve to announce its plan to reduce its $120 billion asset purchase plan at its September meeting, believing that the U.S. economy is currently on a path of sustainable growth, especially in the context of rising inflation and tightening labor markets.
At the Virtual Jackson Hole Symposium for Central Bank Governors held last week, the chairman Jay Powell Support Adjustments will be made before the end of the year, but it shows that further progress is needed in the labor market before stimulus measures can be reduced. He also cautioned against withdrawing policy support prematurely, which he said would be “harmful” because the job market is still “severely weak” and the pandemic is still raging.
Although the labor market has made great strides recently, 5.3 million Americans are still unemployed compared to February 2020 before the global pandemic.
Robert Rosener, senior American economist at Morgan Stanley, said Friday’s report “eliminated some of the urgency of the September announcement.” “It is absolutely disappointing to see the slowdown in employment growth in August.”
Rosener said that the announcement of production cuts may still be released before the end of the year, but given the increasing evidence that the Delta variant is curbing economic activity, the timing is very uncertain.
Before the report was released, most investors had stated that they generally believed that the Fed would announce the news at the November policy meeting.
On Wall Street, the stock market fluctuated due to new data, and the benchmark S&P 500 index closed down less than 0.1%. Nearly 70% of the stocks in the index fell, and the value of stocks in more economically sensitive industries, including the transportation industry, fell.
U.S. Treasury yields, which are inversely proportional to prices, rose after the announcement. As investors dumped debt and the exchange rate of the U.S. dollar against the British pound weakened, the yield on the benchmark 10-year U.S. Treasury note climbed 0.04 percentage points to 1.32%.
According to official data released this week, the labor market in the Eurozone recovered. The unemployment rate in July fell by 0.2 percentage points from the previous month to 7.6%, the lowest level since May 2020.
Additional reporting by Valentina Romei and Eric Platt