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US job growth stronger than expected in October, Economy News & Top Stories

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WASHINGTON • The US labour market improved in October by more than forecast, defying expectations for more subdued gains amid an intensifying Covid-19 pandemic and lack of additional fiscal relief.

Non-farm payrolls increased by 638,000 after an upwardly revised 672,000 gain in the previous month, according to a Labour Department report yesterday. That compared with the 580,000 median estimate of economists surveyed by Bloomberg, and reflected a decline of 147,000 in temporary census workers.

The unemployment rate in the United States fell to 6.9 per cent from 7.9 per cent, a bigger decline than economists projected.

Progress in the US labour market is holding up as household savings help fuel spending and business investment rebounds, providing whoever wins the presidential election with an economy that is in better shape than many analysts expected just six months ago.

But jobs remain 10 million below pre-pandemic levels, and with coronavirus infections rising at a record rate this week, maintaining the pace of hiring may be difficult.

Other figures point to an increasingly fragile labour market beneath the headline numbers. The number of permanent job losses was at 3.7 million last month, 2.4 million above its level before the pandemic, while the number of people jobless for at least 27 weeks grew by 1.2 million, indicating some Americans were having trouble finding employment.

And the number of people working part time because they cannot find a full-time job rebounded last month after falling in September.

The report underscored the challenges the next president, whether it is incumbent Republican Donald Trump or Democrat Joe Biden, will confront to keep the economy growing as it heals from the deepest recession since the Great Depression.

A gridlock in the US Congress may also reduce the chances of another coronavirus rescue package from the government this year. Even if more fiscal policy is agreed on, it will likely be smaller than had been anticipated before the Nov 3 election.

That will shift the spotlight to the Federal Reserve. The US central bank kept interest rates near zero on Thursday. Fed chair Jerome Powell acknowledged the pace of improvement in the economy and labour market had moderated, noting that the recovery would be stronger with more fiscal support.

More than US$3 trillion (S$4 trillion) in government pandemic relief for businesses and workers fuelled a historic 33.1 per cent annualised rate of economic growth in the third quarter. That followed a record 31.4 per cent pace of contraction in the April-June quarter.

Lack of fiscal stimulus and spiralling new infections across the country have put the US economy on a sharply slower growth path heading into the fourth quarter.

Restaurants and gyms have moved outdoors, but cooler weather and the resurgence in Covid-19 infections could leave many in trouble.

Even if states and local governments do not impose new restrictions on businesses, consumers are likely to stay away, fearing exposure to the respiratory illness. The US set a one-day record for new coronavirus cases on Wednesday with at least 102,591 infections, according to a Reuters tally.

Though small and medium-sized businesses have suffered most from the pandemic, large corporations have not been spared. Exxon Mobil last month announced 1,900 layoffs in the US. Boeing said it expected to eliminate about 30,000 jobs, 11,000 more than previously planned, by end-2021.

While the unemployment rate has dropped from a peak of 14.7 per cent in April, it has been distorted by people misclassifying themselves as being “employed but absent from work”.

At least 21.5 million people were receiving unemployment benefits in mid-October. Many people, mostly women, have dropped out of the labour force to look after their children or because they fear contracting the virus.

BLOOMBERG, REUTERS



Straitstimes News

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