A sharp deceleration in job creation
Published this Friday, September 3, the monthly employment report of the US Department of Labor revealed figures well below analysts’ expectations. Concretely, the economy of the United States is recording a deceleration in job creation, especially in the service sector, which has been hit hard by the Covid-19 epidemic.
While the consensus of economists polled by Reuters predicted an average of 750,000 job creations, the US Department of Labor report reported 235,000 jobs created in August, three times less than expected. This deterioration in companies in the service sector is all the more flagrant as the months of July and June had recorded rather encouraging data (+1.1 million and +962,000 jobs created respectively in July and June).
” The good news? There are not any “, commented in a note Ian Shepherdson, chief economist at Pantheon Macronoeconomics. “September will undoubtedly be just as bad, and we are starting to be worried about the possibility of a rebound in October”, he anticipated.
Less pessimistic, President Joe Biden called the economic recovery “Durable and strong”, despite this slowdown caused by variant Delta. According to him, the current economic conditions show that his plan is “working”, even if he admits that the growth is below expectations. “Despite the progress we have made, we are not where we need to be in our economic recovery”, he clarified.
A slowdown in growth in the tertiary sector
The decline in job creation in the tertiary sector goes hand in hand with a slowdown in growth in this sector, due not only to the resurgence of the Delta variant of the coronavirus and to shortages of raw materials which are weighing on the replenishment of stocks. enterprises.
According to the ISM, the index of the professional federation, published this Friday and which measures the level of activity of companies compared to the previous month, growth remained solid but experienced a slowdown. The index stood at 61.7% in August, a sign of growth certainly at the rendezvous (since the index exceeds 50%), but nevertheless lower than the record recorded in July, of 64.1% .
The service sector, vital to the US economy, has suffered the most from restrictions imposed to contain the spread of the coronavirus. The National Federation of Restaurants recently announced a drop in attendance in August.
A declining unemployment rate
Despite this slowdown in job creation and growth in the service sector, the United States recorded a declining unemployment rate to 5.2% in August, from 5.4% the previous month .
However, official surveys consider the rate to be underestimated due to the high number of people declaring themselves “Employed but absent from work” since the start of the epidemic.
An increase in inflationary signals
Finally, and although it may seem paradoxical at first glance, inflationary signals are increasing in the United States. The average hourly wage, on the one hand, rose 0.6% in August compared to the previous month, or twice the expected increase, and posted a year-on-year increase of 4.3%. An evolution that is in line with Joe Biden’s strategy of raising wages, in order to revive the American economy in a context of labor shortage.
In addition, on the bond market, yields on Treasury bills trended upward, to 1.324% for ten-year securities against less than 1.30% before the publication on Friday of official statistics from the US Department of Labor. .
The only exception to the general trend is the dollar, which initially trended downward, then falling to $ 1.19 per euro, its lowest level since July 30, but which quickly wiped out its losses.
One thing is certain: these August figures will be scrutinized by investors to try to find clues as to the evolution of the monetary policy of the Federal Reserve. The institution should announce in September or November its intention to reduce its purchases of bonds on the markets, one of the main supports to the economy. Employment in the United States, in particular, is becoming “The key indicator for investors, in order to anticipate the gradual reduction in the Fed’s asset purchases”, underlines Benjamin Melman, CIO Edmond de Rothschild Asset Management, in his monthly commentary.
(with AFP and Reuters)
