Posted on Oct 8, 2021, 4:28 PM
The American paradox continues: unemployment remains much higher than before the crisis, but companies are failing to recruit. Labor Department figures, released Friday, show that the US economy created just 194,000 jobs in September, when economists expected 500,000. The month of August had already been considered disappointing.
The pace of job creation has slowed significantly compared to the start of the year. Over the first seven months of 2021, an average of 636,000 jobs were created every month (and one million a year ago).
Economists believed that with the reopening of schools and offices in September across much of the country, unemployment would decline sharply. The closure of schools was notably an obstacle to the return to employment of tens of thousands of parents. This is not the case and Americans are still reluctant to resume an activity requiring physical interactions.
Unemployment at 4.8%
Several phenomena can explain these half-hearted figures. First, the Department of Labor survey took place as the Delta variant peaked. Americans were therefore hesitant to go to tourist places, restaurants, airports, and those unemployed did not rush to job offers. The leisure and hospitality sector thus created less than 100,000 jobs for the second consecutive month. In addition, many federal aid intended for workers affected by the Covid crisis ended at the beginning of September, but the Americans were able to save during the crisis and the return to the job market has therefore not was immediate.
While the unemployment rate fell to 4.8%, from 5.2% the previous month, it remains higher than it was in February 2020 (3.5%). And, above all, this drop actually reflects the withdrawal of tens of thousands of employees from the job market. Some have, for example, anticipated their retirement.
Fed plans delayed?
Companies are having more difficulties than ever in recruiting. The number of unfilled jobs peaked at the end of July, at 11 million (higher than the number of unemployed). Companies are making some efforts to try to keep their employees. In September, the average hourly wage of employees in the private sector increased by 4.6% year-on-year.
These figures could have immediate consequences for economic and monetary policy. The Biden administration is currently negotiating its vast infrastructure renovation plan, and will find there arguments to accelerate these projects, even if the shortage of manpower could complicate their implementation. The Fed was waiting for a “report on significantly good employment” to begin to reduce its program of purchases of securities. Initially anticipated for the next meeting in early November, the decision could be delayed. And the rate hike, planned for next year, remains very uncertain.
Hope remains, however. Since the unemployment figures were measured by the Department of Labor, the Delta variant has fallen sharply in the United States. Over the last fourteen days, the number of new cases has fallen by 22% nationwide. The next figures will be scrutinized more than ever.
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