U.S. likely profited from hiring surge in July as economy rebounds
WASHINGTON (AP) – Despite a slight increase in COVID-19 cases and a shortage of available workers, the U.S. economy likely saw an explosion in job growth last month as it rebounded with vigor surprisingly after the coronavirus shutdown last year.
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- Despite an increase in COVID-19 cases and a shortage of available workers, the U.S. economy likely saw an explosion in job growth last month as it rebounded with surprising vigor after the coronavirus shutdown from last year
- The Department of Labor’s July employment report on Friday is expected to show the United States created more than 860,000 jobs in July, surpassing June’s 850,000, according to a survey of economists from data firm FactSet .
- The vaccine rollout has encouraged businesses to reopen and consumers to return to shops, restaurants and bars they had avoided for months after the start of the pandemic
The Labor Department’s July employment report on Friday is expected to show the United States created more than 860,000 jobs last month, surpassing June’s 850,000, according to a survey of data firm economists FactSet.
Oxford Economics economist Lydia Boussour expects even more – 1.02 million – in part because seasonal factors will increase the number of people hired to teach in public schools and work in restaurants and hotels.
Economists also expect the unemployment rate to fall to 5.7% from 5.9% in June, according to FactSet.
The coronavirus triggered a brief but intense recession last spring, forcing businesses to close their doors and consumers to stay at home as a health precaution. The economy lost more than 22 million jobs in March and April 2020. Since then, however, it has recovered nearly 16 million jobs, leaving a deficit of 6.8 million compared to February 2020.
The vaccine rollout encouraged businesses to reopen and consumers to return to shops, restaurants and bars they had avoided for months after the start of the pandemic. Many Americans are also in a surprisingly strong financial position, as the lockdowns saved them money and federal government bank relief checks.
As a result, the economy rebounded at an unexpected speed. The International Monetary Fund expects the United States’ gross domestic product – the broadest measure of economic output – to increase by 7% this year, its fastest pace since 1984.
Employers are posting jobs – a record 9.2 million openings in May – faster than applicants can fill them.
Some companies accuse generous federal unemployment benefits – including an additional $ 300 per week added to the state’s regular unemployment assistance – of deterring Americans from looking for work. In response, many states abandoned federal unemployment assistance even before it expired nationally on September 6.
Many Americans may be left out of the workforce due to lingering health concerns and difficulties obtaining child care at a time when many schools are closed.
Another problem: Many of those who have lost their jobs due to the coronavirus recession cannot return to their old jobs.
Rubeela Farooqi, chief US economist at High Frequency Economics, notes, for example, that around 80,000 restaurants have closed since March 2020. These displaced workers must therefore find new employers and often new careers.
“Matching the unemployed to job vacancies will likely be a longer process, given that finding a new job, perhaps in a new industry, will be a challenge,” Farooqi wrote in a research report.
Farooqi also said the labor market may face longer-term struggles once temporary labor shortages are resolved. Indeed, many companies have adapted to work with fewer employees during the pandemic, often using technology that has reduced the need for human labor.
A resurgence of COVID-19 cases caused by the spread of the highly contagious delta variant has also clouded employment prospects. The United States is reporting on average more than 75,000 new cases per day, down from less than 12,000 per day at the end of June – although they remain well below the 250,000 levels at the start of January.
According to Boussour of Oxford Economics, the spread of the delta variant could have “dampened the willingness and ability of workers to re-enter the labor market”.
But she doubts it will have a big impact on the July figures, as concerns about the virus only escalated after the Labor Department collected its hiring data for last month.