Washington (AP) – Surprisingly, the situation in the US labor market improved significantly in October despite a new corona wave. The unemployment rate fell from 7.9 percent in the previous month to 6.9 percent, as the US Labor Department announced in Washington on Friday.
Analysts only expected a 7.7 percent decline. According to the authority, companies outside the agricultural sector created 638,000 new jobs last month; the experts’ forecasts were also clearly exceeded in terms of job creation. Furthermore, employment growth in the previous two months was subsequently corrected upwards by a total of 15,000 jobs.
Yet the job market in the world’s largest economy remains battered and far from pre-crisis levels. For comparison: Before the pandemic, the unemployment rate was only 3.5 percent. The number of unemployed fell by 1.5 million to 11.1 million in October. It is the sixth consecutive decline. But: in February the figure was only 5.8 million.
The crown crisis had largely crippled the US economy, causing the unemployment rate to skyrocket to more than 14 percent in April. Therefore, it reached the highest value since records began after World War II. Since then, things have been steadily improving, but in view of the imminent escalation of the new crown, the situation in the labor market remains critical.
The recovery after the large waves of layoffs at the beginning of the crisis is also making difficult progress, the pace of job reconstruction is slowing: job growth in October was the lowest in six months. “May-October job growth now makes up for a little more than half the drop,” says NordLB analyst Bernd Krampen.
“America is still a long way from full employment,” says Ulrich Wortberg, an expert at Helaba. “Job creation is progressing, but only in small steps,” says VP Bank chief economist Thomas Gitzel. Since March, more than 10 million jobs have been eliminated in the United States.
The burden that the crisis continues to carry on the crown was already evident on Thursday from new data from the US Department of Labor, according to which 21.5 million people recently received some form of unemployment benefit. Last week, 751,000 were added, which is still a dramatically high value by historical comparison.
Nor should the sharp falls in the unemployment rate be overestimated. Because the statistics do not include all Americans who are unemployed and would like to have a job. Many have given up their job search discouraged and do not register. “Because so many people have left the job market, the unemployment rate is skewed by almost three percentage points,” estimates Dekabank chief economist Ulrich Kater.
The United States Federal Reserve (Fed) also assumes that the true unemployment rate is much higher. The monetary authorities initially refrained from further easing of monetary policy on Thursday, but confirmed their willingness to act in the crisis. The Fed is already adopting a very flexible line with key interest rates in the extremely low range of 0 to 0.25 percent and billions in bond purchases to support the economy.