Slow Job Growth In The US With Covid-19 Stalling Recovery

With the Covid-19 pandemic continued to disrupt economy recovery in the United States, just 49,000 jobs were added in the country in January.

Employment was hit at retail stores, restaurants, casinos and hotels because of continued losses which was described as analysts as reflecting the requirement for more economic relief to these sectors by the government.

The overall rate of unemployment in the country was at 6.3 per cent in January, lower by just 0.4 per cent compared to the previous month of December, said the US Labour Department. Currently the number of unemployed in the country is about 10 million more than the total number in February last year prior to the pandemic hitting the country.

“It’s very clear that our economy is still in trouble,” US President Joe Biden said in a speech on Friday. He also urged for the approval of a $1.9tn spending package. “I see enormous pain in this country. I am going to act fast.”

The trend of job losses in December was followed by weak hiring in January and these two months brought an end to a period of job growth in the economy that started in May last year. 

The falls in jobs in the past two months were deeper than originally estimated with about 227,000 job losses in place of loss of 140,000 jobs as previously reported, said the US Labour Department.

A larger number of people giving up on looking work, since it was estimated that about  400,00 more people withdrew from the labour force, was one of the reasons for the fall in job losses, said analysts.

“This is a significantly softer report than expected, at least in terms of payrolls,” said Ian Shepherdson, of Pantheon Macroeconomics. “The bottom line here is that the labour market was frozen at the start of the year, and is completely dependent on the pace of reopening, which in turn is contingent on the speed and sustainability of the fall in hospitalizations.”

Most of the job gains in January were attributed to temporary hirelings even as jobs were cut in most other industries.

The trend of lob losses hitting people from the lower income group, minority and female continued in January and about 40 per cent of the unemployed people in the country had been without jobs for more than six months. 

The proposed $1.9tn stimulus pandemic package of Biden includes handing over $1,400 to most families while also expanding the jobless aid and give monetary assistance to ailing businesses. Part of the money would also be used for Covid-19 testing and vaccination.

“The soft January US employment report strongly implies that the next round of fiscal aid/stimulus needs to be error on the side of caution and go big,” economist Joseph Brusuelas, of the RSM accounting and consultancy firm, wrote on Twitter.

“Outside of professional business and services hiring this report is undeniably weak.”

(Adapted from BBC.com)



Categories: Economy & Finance, Geopolitics, HR & Organization, Regulations & Legal, Strategy, Sustainability

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