WASHINGTON (Reuters) – The US economy added the lowest number of workers in six months to November, hampered by a resurgence of new COVID-19 cases that, coupled with a lack of additional funding for government subsidies, threatens to reverse the recovery. from the pandemic recession.
The closely followed employment report also showed 3.9 million people out of work for at least six months, many of whom have given up, a sign of lack of confidence in the labor market. The report, which only covered the first two weeks of November when the current wave of coronavirus infections began, highlighted the challenges President-elect Joe Biden faces when taking over. from President Donald Trump in January.
The economy only recovered 12.4 million of the 22.2 million jobs lost in March and April. Even with a vaccine on the way, economists warn of a bleak winter and have urged Congress to provide more fiscal stimulus.
“The recovery has stalled and, at best, fragile,” said Sung Won Sohn, a professor of finance and economics at Loyola Marymount University in Los Angeles. “The onset of winter and the resurgence of the virus could send the economy into another dip before the vaccine and further stimulus from Washington come to the rescue. “
Nonfarm payrolls rose 245,000 jobs last month after rising 610,000 in October. This was the smallest gain since the start of the employment recovery in May and the fifth consecutive monthly slowdown in employment growth. Economists interviewed by Reuters predicted that payrolls would increase by 469,000 jobs in November. Hiring peaked at 4.781 million jobs in June.
Employment growth last month was held back by further departures of temporary workers hired for the 2020 census. Local governments continued to lose more workers, especially in schools, causing overall government wages to drop by 99,000 jobs. work, the third consecutive monthly decline. The private sector added 344,000 jobs.
The retail sector lost 35,000 jobs. Retailers typically undertake seasonal hiring in November, a practice that has been overturned by the pandemic. This disruption likely threw away the model the government uses to eliminate seasonal fluctuations from the data.
But hiring in the transportation and warehouse sectors increased by 145,000 jobs, accounting for nearly three-fifths of wage earnings. Employment has also increased in professional and business services, financial activities and the healthcare industry. Construction payrolls increased by 27,000 jobs and manufacturers added 27,000 positions.
Lower-than-expected job gains added to reports on consumer, manufacturing and service industries spending in suggesting the recovery from the worst recession since the Great Depression was running out of steam.
Instant view: US payrolls earnings for November are insufficient and threaten recovery
“At this rate, complete stagnation or job losses in December wouldn’t be a big surprise,” said Beth Akers, a senior fellow at the Manhattan Institute. “It’s hard to imagine that the remaining jobs we lost earlier this spring will return until we successfully deploy a vaccine that would allow companies to return to normal operations.”
US stocks rose as the employment report reinforced expectations for more government aid. The dollar fell against a basket of currencies. US Treasury prices were lower.
LONG RISKS OF UNEMPLOYMENT
The United States is in the midst of a new wave of COVID-19 infections. Nearly 200,000 new cases were reported on Wednesday and hospitalizations approached a record 100,000 patients, according to a Reuters tally of official data.
A $ 908 billion bipartisan coronavirus aid plan gained momentum in Congress Thursday as conservative lawmakers expressed their support and leaders of the US Senate and House of Representatives gathered together.
More than $ 3 trillion in COVID-19 government aid approved earlier this year helped millions of unemployed Americans cover their daily expenses and businesses keep workers on payrolls, leading to record economic growth in the third. quarter. The uncontrolled pandemic and the lack of further fiscal stimulus could lead to a contraction of the economy in the first quarter of 2021.
While the unemployment rate fell to 6.7% from 6.9% in October, as 400,000 people left the workforce. It was also biased by people who mistakenly classify themselves as “busy but absent from work. “Without this error, the unemployment rate would have been around 7.1%.
(Graph: Long-Term Unemployment Rises During Pandemic)
The labor force participation rate – the percentage of working-age Americans who have a job or are looking for one – dropped to 61.5% from 61.7% in October. The share of women in the workforce fell last month. Industries that tend to hire women have been hit hard by the recession.
Many women also quit their jobs to take care of children as education departments switched to online learning. Just over half of the 8 million people who left the workforce between February and April have returned.
The number of people unemployed for 27 weeks or more jumped to 385,000 in November. These long-term unemployed accounted for 36.9% of the 10.7 million unemployed last month. About 3.743 million people have permanently lost their jobs, an increase of 59,000 from October.
Despite the large slowdown in the labor market, the average hourly wage increased by 0.3% after rising by 0.1% in October. This left the year-over-year increase in wages at 4.4%. The average work week was constant at 34.8 hours.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao