Although better than expected, today’s US labor market report indicates a significant slowdown in the recovery. In addition, it is difficult to conclusively assess today’s data, as some countries stopped or even reversed any easing that had started during the month.
The majority of the newly created jobs were concentrated in the service sector: around 1.42 million of the total of 1.46 million new jobs were created there in the private sector. The development in the leisure and hospitality industry in particular points to renewed weakness. While 1.98 million jobs were created in June, July only saw an increase of 0.59 million. Most likely, some of these jobs have already been lost as a result of a reintroduction of measures to combat the pandemic. The development in the manufacturing sector was particularly disappointing, with only 26,000 new jobs registered. Despite a moderate increase in production recently, this indicates considerable overcapacity.
The unemployment rate fell from 11.1 to 10.2 percent. There are still around 16 million unemployed in the United States, compared to 5.78 million in February. This illustrates that the labor market is still in a very precarious situation and that a full recovery could well take some time. We hope that today’s numbers, while solid compared to expectations, are having an impact and fuel the decision-making process in Washington about further fiscal support measures.
Author: Christian Scherrmann, USA economist
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