Smallest job gains in five months expected as U.S. labor market momentum wanes
November 06, 2020 @ 10:57 +03:00
U.S. employers likely hired the fewest workers in five months in October, in what would be clearest indication yet that the end of fiscal stimulus and exploding new COVID-19 infections were sapping momentum from the economic recovery. The Labor Department’s closely watched employment report on Friday will underscore the challenges the next president, whether it is incumbent Republican Donald Trump or Democrat Joe Biden, confronts to keep the economy growing as it heals from the deepest recession since the Great Depression.
Biden inched closer to victory on Thursday in an exceedingly close U.S. election, while Trump alleged fraud without providing evidence, filing lawsuits and calling for recounts in a race yet to be decided since polls closed on Tuesday. Nonfarm payrolls likely increased by 600,000 jobs in October after rising 661,000 in September, according to a Reuters survey of economists. That would be the smallest gain since the jobs recovery started in May and leave employment 10.1 million jobs below its February peak.
The employment report is also expected to show increases in the ranks of people who have permanently lost their jobs, as well as those who have been out of work for more than six months. A contested election reduces 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 election.
The U.S. central bank kept interest rates near zero on Thursday. Fed Chair Jerome Powell acknowledged the pace of improvement in the economy and labor market had moderated, noting that the recovery would be stronger with more fiscal support. More than $3 trillion in government pandemic relief for businesses and workers fueled a historic 33.1% annualized rate of economic growth in the third quarter. That followed a record 31.4% pace of contraction in the April-June quarter.
Lack of fiscal stimulus and spiraling new coronavirus infections across the country have put the 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. The unemployment rate is forecast falling to 7.7% from 7.9% in September. That is not a true reflection of the labor market’s health as the jobless rate has been biased down by people misclassifying themselves as being “employed but absent from work.”
With labor market momentum ebbing, average hourly earnings are forecast rising 0.2% in October after gaining 0.1% in September. The average workweek is seen steady at 34.7 hours.
Smallest job gains in five months expected as U.S. labor market momentum wanes, Reuters, Nov 6