USA: Recovery on the labor market continues, but momentum is likely to decline further

The situation on the US labor market continued to improve in August as a result of the economic recovery: although slightly fewer jobs were created than in July, the overall increase in employment was quite respectable at around 1.4 million. As a result, the unemployment rate fell surprisingly sharply from just over 10 percent to 8.4 percent, possibly as a result of the now significantly reduced federal subsidies for unemployment assistance. According to the Statistics Office, however, there are still errors in classification, so that the unemployment rate is likely to be somewhat higher. Nevertheless, the latest labor market figures give a positive signal for the US economy, which is receiving a lot of attention, especially during the election campaign, and Donald Trump is certainly welcome.

Once again, job growth was mainly in the service sector, where the employment situation continues to "normalize". In the retail trade and the leisure and accommodation industry in particular, many people were once again hired who were still laid off as a result of the lockdown. But the state has also been hiring heavily recently, with around a quarter of the increase in employment taking place in this sector. The background to this is probably above all an increased need for personnel due to the 2020 census.

Looking ahead over the coming months, the positive trend on the labor market should continue in principle, although employment growth will continue to slow. After all, the many newly created jobs in the government sector are only a one-off effect of the population survey. Moreover, these employment contracts are limited in time. By contrast, the private sector continues to be very reluctant to hire new employees. This has recently been shown again by the ISM surveys. The purchasing managers even reported a continuing reduction in employment.

In view of this, one should not hope too much for further major progress on the labor market in the coming months. However, these would be urgently needed because the number of employees is still more than 11 million below its pre-crisis level.

Source: Bureau of Labor Statistics; sb.=seasonally adjusted

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