US job growth slows in August as govt’s financial aid runs out

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WASHINGTON • United States slowed further last month as assistance from the government ran out, threatening the economy’s recovery from the Covid-19 recession.

Non-farm payrolls increased by 1.371 million jobs last month after rising by 1.734 million in July, the Labour Department’s closely watched employment report showed yesterday.

The unemployment rate fell to 8.4 per cent from 10.2 per cent in July.

Economists polled by Reuters had forecast 1.4 million jobs added in and the unemployment rate sliding to 9.8 per cent.

Companies from the transportation to manufacturing industries have been announcing layoffs or furloughs, putting pressure on the White House and Congress to restart stalled negotiations for another fiscal package.

With just two months to go until the presidential election, the jobs situation likely will provide political ammunition for both Democrats and Republicans.

Programmes to help businesses pay wages have either lapsed or are on the verge of ending. A US$600 (S$820) weekly unemployment supplement expired in July.

Economists credited government largesse for the sharp rebound in economic activity after it nearly ground to a halt following the shuttering of businesses in mid-March to control the spread of the coronavirus.

Yesterday’s report is one of just two monthly labour market scorecards left on the calendar before the Nov 3 presidential election.

Employment growth peaked at 4.791 million in June. Most of the job gains stem from workers being recalled from furloughs or temporary layoffs.

Though new Covid-19 infections have subsided after a broad resurgence through the summer, many hot spots remain.

United Airlines said on Wednesday it was preparing to furlough 16,370 workers on Oct 1.

American Airlines has announced its workforce would shrink by 40,000, including 19,000 involuntary cuts.

Ford Motor said it was targeting 1,400 US salaried jobs for elimination by the year end.

Mass transit rail operators are also eyeing furloughs.

A report this week from the Federal Reserve based on information collected from the US central bank’s contacts on or before Aug 24 showed an increase in employment.

The Fed, however, noted that “some districts also reported slowing job growth and increased hiring volatility, particularly in service industries, with rising instances of furloughed workers being laid off permanently as demand remained soft.”

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