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 economic recovery after 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 turmoil to the White House’s handling of the pandemic, which has killed more than 200,000 and infected more than 7 million 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 pick-up in jobs began in May, after rising 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.
Employment in the leisure and hospitality sector increased by 318,000, almost half of the increase in non-farm employment. The payroll 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 has again been skewed by people mistakenly classifying 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. There were 3.8 million people who had lost their jobs for good, 345,000 more than in August. Most have experienced long bouts of unemployment, with the number of people out of work for more than 27 weeks climbing 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 the historic pace 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 further stimulus,” Chris said. Rupkey, chief economist at MUFG in New York.
Wall Street stocks 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. Trump’s positive coronavirus test has added to political uncertainty that could extend beyond the election and make companies cautious about hiring.
Walt Disney Co. said this week it would 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.
With many long spells of unemployment lingering, economists estimate that the unemployment rate will not see its pre-crisis level of 3.5% until mid-2024 and that it may take a year to recover. jobs lost. 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.
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.
Although people worked longer hours, an approximate take-home pay fell year over year for a sixth consecutive month.
“This, combined with a reduction in budget support, will temper consumer spending in the months to come,” said Kathy Bostjancic, chief US financial economist at Oxford Economics in New York.