USA: Uneven labor market – fuel for “Washington last exit”! – Nord LB column

New September labor market data has just been reported in the US. They were in the spotlight, as they are the last figures on the important employment situation before the presidential election on November 3rd – and thus real explosive in the election campaign! The pandemic continues to dominate developments on the labor market. The indications were mixed: Although initial jobless claims fell more slowly than in early summer, the two ISM employment components rose quite significantly.

Ultimately, 661,000 new jobs were created in September, which is below expectations. However, firstly, the previous month was revised up by 100,000 and secondly there were (significant) job cuts only among public employees. The private sector created nearly 900,000 new jobs, which makes the headline number appear in a friendlier light. After the largest job cut in history by 20 million people in April, there is now a strong – but declining – increase in employment for the fifth month in a row. The job growth from May to September made up about half of the slump!

The unemployment rate fell for the fifth month and surprisingly significantly to 7.9%. The highest value since the Second World War of 14.7% in April was therefore followed by successive improvements. Nobody expected such a low rate of less than 8% in early summer! However: The decline in the quota is currently partly due to a decline in the Labor Force.

The average weekly hours increased slightly, wages only moderately by 0.1% m / m.

The rapid increase in the number of infections in the US that has been observed since the end of June now appears to be slowing the recovery somewhat – which is not surprising. Nevertheless, the majority of the data show that the fundamental recovery process has continued so far in macroeconomic terms. The III. Quarter will thus show a historic record for GDP growth: We expect an increase of (at least) + 25% Q / Q ann. – the announcement is on October 29th!

What is explosive about this labor market report is that it was the last one before the US presidential election on November 3rd. From these figures – and the GDP growth figures on October 29th. – Both candidates want to suck ammunition in the election campaign. And they can do that too: While incumbent Donald Trump can point to an unemployment rate of less than 8%, his challenger Joe Biden will complain about the increasingly dwindling number of jobs. After the heated TV duel at the latest, the USA is in electoral mode – all the news are used as arguments. But do arguments even matter? No, reason is the first loser! It remains to be seen what implications the Trump contagion will have.

In view of the possibility of evaluating this report on the basis of points of view – including political ones – there were no significant price movements on the financial markets.

Conclusion: The increase in jobs in the USA in September was 661,000 people, less than in the previous months and than expected. The job cuts in April have now been followed by five months of significant job growth, so that almost half of the corona slump has been caught up. The unemployment rate even fell to 7.9%. With such a job engine, the macroeconomic recovery process will continue, but foreseeably at a slower pace. The big question is how much this dynamic will decrease further. As the last labor market report before the US presidential election on November 3, today’s election campaign data can provide ammunition for both opponents: While incumbent Donald Trump will point to an unemployment rate of less than 8%, his challenger Joe Biden is likely to complain about the steadily declining job creation. But what do arguments and facts count? The USA seems to need – at least – a “day of unity” at the moment!

Disclaimer: This text is a column of the North LB. 4investors is not responsible for the content of the column and therefore does not necessarily have to agree with the opinion of the 4investors editorial team. Any liability and claims are therefore expressly excluded by 4investors!

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