WASHINGTON (Reuters) – The US economy created the fewest jobs in five months in October and more Americans work part time, the strongest evidence that the recovery from the pandemic recession was slowing as fiscal stimulus ended and new cases. COVID-19 exploded.
The Labor Department’s employment report on Friday also showed 3.6 million people were out of work for more than six months, highlighting the challenges facing the next president, whether he is Republican Donald Trump or Democrat Joe Biden, faces heal from the deepest recession since the Great Depression.
Biden came close to winning the White House early Friday, taking a small lead over Trump in the battleground state of Georgia. Trump on Thursday accused alleged fraud without providing evidence, filing lawsuits and asking for recount in a race yet to be decided since polls closed on Tuesday.
Non-farm payrolls increased by 638,000 jobs last month after rising by 672,000 in September. This was the smallest gain since the job recovery began in May and left 10.1 million employment below its peak in February. An increase of 271,000 jobs in the leisure and hotel sector accounted for about two-fifths of the payroll gain last month.
Employment in professional and business services increased by 208,000, with about half of the jobs earned in temporary help services. Government wages fell by 268,000, weighed down by the departure of temporary workers hired for the 2020 census and further job losses at cash-strapped state and local governments.
Economists interviewed by Reuters had forecast payrolls to rise by 600,000 jobs in October.
A disputed election reduces the chances of another coronavirus rescue package from the government this year. Even if a greater fiscal policy is agreed, it will likely be lower than expected before the elections.
This will shift the spotlight on the Federal Reserve. The US central bank kept interest rates close to zero on Thursday. Fed Chairman Jerome Powell acknowledged that the pace of improvement in the economy and the labor market has moderated, stressing that the recovery would be stronger with more fiscal support.
US stocks took a pause on Friday after surging more than 7% this week. The dollar fell against a basket of currencies. US Treasury prices were lower.
LONG RISKS OF UNEMPLOYMENT
More than $ 3 trillion in government pandemic aid for businesses and workers fueled a historic annualized economic growth rate of 33.1% in the third quarter. This followed a record pace of contraction of 31.4% in the April-June quarter.
The lack of fiscal stimulus and the spiral of new coronavirus infections across the country have put the economy on a markedly slower growth path towards the fourth quarter. Restaurants and gyms have moved outdoors, but cooler weather and the resurgence of COVID-19 infections could leave many in trouble.
Even if states and local governments don’t impose new restrictions on businesses, consumers are likely to stay away, fearing exposure to respiratory disease. The United States set a one-day record for new coronavirus cases on Wednesday with at least 102,591 infections, according to a Reuters tally.
While small and medium-sized businesses have suffered most from the pandemic, large companies have not been spared. Last month Exxon Mobil announced 1,900 layoffs in the United States. Boeing said it plans to eliminate about 30,000 jobs, 11,000 more than previously planned, by the end of 2021.
The unemployment rate fell to 6.9% from 7.9% in September. But he continued to be biased by people who mistakenly classify themselves as “busy but absent from work”.
Without this recurring mistake, the government said the unemployment rate would have been around 7.2% in October.
Although the unemployment rate fell from a peak of 14.7% in April, this is not a true reflection of the health of the labor market. The number of people out of work for more than six months increased from 1.2 million to 3.6 million in October.
The number of people working part-time for economic reasons increased from 383,000 to 6.7 million, reflecting the reduction in hours due to slow work or company conditions.
At least 21.5 million people were receiving unemployment benefits in mid-October. Many people, especially women, have left the workforce to care for children or because they fear contracting the virus.
Reporting by Lucia Mutikani; Editing by Andrea Ricci