US job growth slows sharply in July amid resurgence in coronavirus cases

WASHINGTON • US employment growth slowed considerably in July, though not as badly as feared, amid a resurgence in Covid-19 infections, offering the clearest evidence yet that the economy's recovery from the recession caused by the coronavirus pandemic was faltering.

Non-farm payrolls increased by 1.763 million jobs last month after a record 4.791 million in June, the Labour Department said yesterday. Economists polled by Reuters had forecast an addition of 1.6 million jobs in the economy in July.

The unemployment rate fell to 10.2 per cent from 11.1 per cent in June, but it has been biased downward by people misclassifying themselves as being "employed but absent from work". At least 31.3 million people were receiving unemployment cheques in mid-July.

"The steam has gone out of the engine and the economy is beginning to slow," said finance and economics professor Sung Won Sohn at Loyola Marymount University. "The loss of momentum will continue and my concern is that the combination of the virus resurgence and lack of action by Congress could really push employment into negative territory."

The labour market step-back is more bad news for President Donald Trump, who is lagging in opinion polls behind former vice-president Joe Biden, the presumptive Democratic Party nominee for the Nov 3 election.

It also piles pressure on the White House and Congress to speed up negotiations on a second aid package. Talks have been dragging over differences on major issues including the size of a government benefit for tens of millions of unemployed.

A US$600 (S$822) weekly unemployment benefit supplement expired last Friday, while thousands of businesses have burned through loans offered by the government to help with wages. The economy, which entered into recession in February, suffered its biggest blow since the Great Depression in the second quarter, with gross domestic product dropping at its steepest pace in at least 73 years.

Virus infections soared across the country last month, forcing the authorities in some of the worst-hit regions in the West and South to either shut down businesses again or pause reopenings.


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A version of this article appeared in the print edition of The Straits Times on August 08, 2020, with the headline US job growth slows sharply in July amid resurgence in coronavirus cases. Subscribe