US jobs recovery slows ahead of November election
The recovery in the US jobs market slowed in September as fiscal stimulus and pent-up demand ran dry, according to the last set of official figures before the November presidential election.
More than 660,000 Americans found work last month, the Bureau of Labor Statistics (BLS) said. However, the jobs growth undershot the 850,000 increase predicted by economists in a Reuters poll. And it was the smallest increase since the jobs recovery started in May.
The US unemployment rate fell to 7.9 per cent in September from 8.4 per cent in August. It was down from a peak of 14.7 per cent in April, when coronavirus first rocked the economy.
It comes as the US enters the final month of the chaotic 2020 presidential election. Voters will choose between incumbent Donald Trump – who today tested positive for coronavirus – and Democrat Joe Biden on 3 November.
Trump had long planned to campaign on the basis of a strong economy and record-low unemployment. But rocketing unemployment and a historic recession amid the coronavirus pandemic put paid to his plan.
However, Trump has argued that the economic recovery from the spring lockdowns has been strong. He is likely to stress that today’s non-farm payrolls figures show the fifth month of jobs gains in a row.
Stimulus far off as jobs growth slows
Yet the slowing rate of employment growth is the latest sign the US recovery is losing steam.
Economists have said the country needs another fiscal stimulus package from Congress. Republicans and Democrats have failed to agree on terms, however.
“After five months of job-gains, momentum is slowing,” said Neil Williams, senior economic adviser at Federated Hermes.
“If jobs continue to be clawed back at September’s rate, it would take another 16 months for the 11m workers displaced since February to return.”
Michael Pearce of Capital Economics said changing government payrolls were part of the reason jobs growth slowed sharply.
He said government payrolls rose by 467,000 in August, in part reflecting temporary hiring for the census. Yet they fell by 216,000 in September “thanks to a massive drop in local government education employment, as the new school year shifted largely online”.
Nonetheless, he said the 661,000 gain in nonfarm payrolls last month “was much weaker than the upwardly-revised 1.5m rise in August”. He added that “it is clear that the economic rebound is entering a new, weaker phase”.