government

Stalling US labour market bolsters Biden’s drive for big stimulus package

February 7, 2021

WASHINGTON: US employment growth rebounded moderately in January and job losses in the prior month were deeper than initially thought, strengthening the case for a sizable relief package from the government to aid the recovery from the Covid-19 pandemic.
The Labour Department’s closely watched employment report on Friday showed job losses in manufacturing and construction, two sectors which have been propping up the economy.
There were further job losses at restaurants and bars. Retailers and employers in the transportation industry also laid off workers.
Millions of Americans are experiencing long spells of unemployment and permanent job losses, while others have given up searching for work.
President Joe Biden on Friday cited the weak report to push the US Congress to pass a $1.9 trillion recovery plan amid resistance from Republicans, now worried about the ballooning national debt.
“It’s very clear that our economy is still in trouble’’, Biden said in an address to the nation. “I see enormous pain in this country. I am going to act fast.” Biden’s fellow Democrats in Congress approved a budget outline that will allow them to muscle the stimulus through in the coming weeks without Republican support.
Nonfarm payrolls increased by 49,000 jobs last month. Data for December was revised to show 227,000 jobs lost instead of 140,000 as previously reported. Employment is 9.9 million jobs below its peak in February 2020.
The economy also created 250,000 fewer jobs in the 12 months through March 2020 than previously estimated.
The Congressional Budget Office has estimated employment would not return to its pre-pandemic level before 2024. Economists polled by Reuters had forecast payrolls rising by 50,000 jobs in January.
“The weakness portrayed in today’s labour report opens the door for the Biden administration to push forward with a higher spending package and provide relief for many Americans and businesses that continue to struggle with the pandemic’’, said Charlie Ripley, senior investment strategist at Allianz Investment Management.
December’s drop in payrolls was the first in eight months and came amid renewed restrictions on businesses like restaurants and bars to slow a resurgence in coronavirus infections.
Though those curbs on businesses continued into the first half of January, there is reason for cautious optimism as some employment measures have been stabilising since the second half of January as authorities began easing restrictions.
The government surveyed businesses for January’s employment report in the middle of the month. It noted the response rate to the survey was “slightly below average.”
Nearly $900 billion in additional relief money provided by the government at the end of December and the acceleration in the distribution of vaccines for the virus could lift hiring in the months ahead.
In addition, the pace of Covid-19 infections appears to have peaked in early January.
“We are hopeful that January will mark the low point for 2021 job creation’’, said James Knightley, chief international economist at ING in New York. “Much stronger jobs figures are likely from the second quarter onwards.”
Manufacturing payrolls decreased by 10,000 jobs, while employment at construction sites dropped by 3,000.
transportation and warehousing industry lost 28,000 jobs.
There were 61,000 job losses in the leisure and hospitality sector. But employment in professional and business services increased by 97,000, with temporary hiring accounting for nearly all the gains.
Government payrolls rose by 43,000 jobs, lifted by state and local government education.

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