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US employment growth loses speed as fiscal stimulus ebbs

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WASHINGTON: US employment growth slowed further in August and permanent job losses increased as money from the government started running out, raising doubts on the sustainability of the economy’s recovery from the deep COVID-19 recession.


Nearly a fifth of the job gains reported by the Laour Department on Friday were from the government’s temporary hiring for the 2020 Census. While the unemployment rate fell below 10 per cent, it was biased down by a continuing misclassification problem.


The slowdown pressures the White House and Congress to restart stalled negotiations for another fiscal package and is likely to become political ammunition for both Democrats and Republicans with just two months to go until the presidential election.


“The labour market has entered a frustratingly slower second phase of the recovery,” said Lydia Boussour, a senior US economist at Oxford Economics in New York. “With one in two laid-off workers still unemployed and Congress unable to pass urgently needed fiscal aid, slower and more volatile job growth represents a significant risk for the economy.”


Nonfarm payrolls increased by 1.371 million jobs last month after advancing 1.734 million in July. Government employment rose 344,000, with 238,000 temporary workers hired for the decennial census.


Excluding government, payrolls rose 1.027 million. Private sector employment gains were led by the retail sector, with 249,000 jobs created. Though professional and business services added 197,000 jobs, more than half of the gain was in temporary help services, reflecting the uncertain economic environment.


Employment in leisure and hospitality increased by 174,000 jobs, but hiring has stepped down from June and July when 2.0 million and 621,000 jobs were added respectively. Manufacturing employment rose 29,000 and construction added 16,000 jobs.


Programmes to help businesses pay wages have either lapsed or are on the verge of ending. 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. — Reuters


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