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Despite the increase in the crown number and new contact restrictions in much of the country, the US unemployment rate fell again in November. The rate fell from 6.9 percent in the previous month to 6.7 percent, as the US Department of Labor announced in Washington on Friday. Analysts only expected a drop to 6.8 percent. However, according to the Ministry, job creation was much lower than expected with 245,000 new jobs.
The future president of the United States, Joe Biden, has expressed his concern about the economic situation of the country after the publication of new employment data. “This is a grim job report,” he said. November data showed economic stagnation and confirmed that “we are still in the middle of one of the worst economic and labor crises in recent history.”
Job growth in November well below expectations
According to the Labor Department report, only 245,000 new jobs were created outside of agriculture in the United States in November, the lowest level since the historic April job market crash. Experts expected a significantly higher increase.
The US job market recovery has continued so far after the historic slump at the start of the pandemic, but it is losing momentum. For comparison: in October the increase in employment was still 638,000 new jobs, since April an average of around two million jobs had been added per month. Now the rally is stagnating more and more. “The third crown wave in the United States is currently holding back new job creation,” said VP Bank chief economist Thomas Gitzel of the latest labor market data.
Despite the positive developments in recent months, the US labor market is still a long way from the strong pre-Crown level, when the unemployment rate was just 3.5 percent. The pandemic temporarily brought the US economy to a near standstill in the spring and caused the unemployment rate to surge to more than 14 percent at times to the highest level since records began after World War II. Since then, the situation has steadily improved, but progress is constantly slowing.
How convulsed the labor market continues in the United States, had already been demonstrated on Thursday in the new applications for unemployment benefits. According to data from the Labor Department, there were 712,000 new initial requests for government assistance last week. That was a decrease of around 75,000 compared to the previous week and significantly less than the average expected by experts. But before the pandemic broke out, weekly requests were mostly around 200,000.
“Warning signs” for the Fed
A total of about 20.2 million people recently received some form of unemployment benefit in the United States. For comparison: a year ago it was only 1.6 million. Nor should the sharp drop in the unemployment rate be overestimated. Here, for example, Dekabank chief economist Ulrich Kater warns of “considerable distortions.” The statistics present the situation too optimistic, since many people would have left the job market discouraged, but they were not included in the figures. The Federal Reserve of the United States also assumes that the real unemployment rate is much higher.
For the Fed, the latest developments in the labor market are a “red flag,” says economist VP Bank Gitzel. Despite key zero interest rates and extremely loose monetary policy, central bank governor Jerome Powell would have to “go one step further” this year. Employment in the world’s largest economy was hit particularly hard in November by the loss of jobs in the public sector. For example, as in the previous month, numerous auxiliary workers who had been temporarily hired by US authorities for a summer census were removed from the statistics.
