Friday, September 03, 2021
Recovery only at a snail’s pace
US companies create unexpectedly few jobs
The delta variant throws a spanner in the works of job creation in the US economy. The contact-intensive service sector is particularly weak. People avoid restaurants and hotels for fear of infection. Despite this, the authorities report a decline in the number of unemployed.
The US economy only created 235,000 new jobs last month – compared to around 750,000 expected. The reason is apparently the corona infections, which have risen sharply in recent weeks. Experts attribute this to the rapid spread of the delta variant, a lack of willingness to vaccinate many people and the abandonment of other protective measures such as wearing a mask. In July, US companies had created 1.1 million new jobs.
The unemployment rate in the United States fell further to 5.2 percent, as the Department of Labor further announced. That was 0.2 percentage points less than in July. In February 2020, the US unemployment rate had reached its lowest level in 50 years: 3.5 percent. In April 2020 the rate had jumped to 14.7 percent, the highest level since the global economic crisis of the 1930s. More than 23 million people were unemployed.
“Delta like a sandstorm”
The job creation is progressing after the Corona dent – but at a snail’s pace, “commented VP Bank’s chief economist, Thomas Gitzel, on the labor market balance. The spread of the delta variant is likely to play a major role.” Especially in the area of accommodation and leisure that is visible, “said the chief economist of the Lampe Bank, Alexander Krüger. Concerned Americans go out less or travel for fear of infection, which has an impact on the need for staff in restaurants and hotels.” The Delta variant is like a sandstorm in an otherwise sunny Economics, “said Sung Won Sohn, economics professor at Loyola Marymount University in Los Angeles. Without that, employment would have been higher in August.”
Due to an acute labor shortage, companies are currently unable to fill the record number of ten million jobs. The lack of affordable childcare and fear of being infected with the coronavirus are made jointly responsible for this. Staff shortages are forcing employers to raise wages. Average hourly wages rose by 0.6 percent in August compared to the previous month – twice as much as economists expected. Compared to the same month last year there was an increase of 4.3 percent. “A relaxation on the inflation front looks different,” said the economist of the Landesbank Baden-Württemberg, Dirk Chlench. Some experts fear that wages and prices will rock each other up. In July the rate of inflation was more than five percent.
The financial markets keep a close eye on the labor market figures. After their release, the dollar depreciated against the euro, while the equity markets came under pressure. A sustained recovery on the job market is an important prerequisite for the central bank to be able to reduce its start-up aid for the economy ravaged by the corona pandemic in the foreseeable future. Central bank chief Jerome Powell has indicated that he will give a signal “this year” when bond purchases will be throttled.
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