The U.S. Department of Labor said on Friday that it recorded a further slowdown in job growth in August. It warned that the U.S. government is quickly running out of finances to support timely economic recovery after moths of halt due to the Coronavirus pandemic that has so far infected more than 6.3 million people in the United States and caused over 191 thousand deaths.
As per the Labor Department, nonfarm payrolls posted an increase of 1.734 million jobs in July. But the increase tanked to a lower 1.371 million in August. The unemployment rate, on the other hand, came in at 8.4% for August versus a higher 10.2% in July.
Economists had forecast nonfarm payrolls to add 1.4 million jobs in August. Their estimate for the unemployment rate in the United States was at a higher 9.8% in August.
Average hourly earnings in the U.S. climbed 0.4% in August
As COVID-19 cases continue to increase in the U.S., companies in several niches ranging from manufacturing to transportation have been pushed into placing part of their workforce on furlough or layoff workers to combat the economic blow from the ongoing health crisis.
Consequently, the U.S. Congress and the White House is under greater pressure than ever before to consider and strategize for another fiscal package.
According to experts, the struggling U.S. job market is likely to provide political ammunition to Republicans as well as Democrats close to the presidential election that is scheduled for November.
The U.S. Bureau of Labor Statistics also said in a separate monthly report that average hourly earnings in the United States saw a 0.4% increase in August. In comparison, average hourly earnings had advanced by 0.1% in July. Economists had expected the reading to remain unchanged in August.
Employment growth in the U.S. had peaked in June when 4.791 million jobs were added to nonfarm payrolls.
The job growth in August, as per the analysts, was attributed to companies that recalled their workers that were temporarily laid off in recent months or placed on furlough.
Several major U.S. companies are planning aggressive job cuts
As per the recent announcements from several large U.S. companies, things are expected to get harder for the world’s largest economy in the upcoming months. Earlier this week, United Airlines said 16,370 of its workers will be furloughed on 1st October.
American Airlines has also expressed plans of slashing its workforce by 40 thousand jobs, including about 19 thousand involuntary cuts.
Among the automakers, Ford Motor warned this week that 1,400 of its salaried employees in the United States are at the risk of losing their jobs before the start of 2021.
The forex market responded significantly to the reports on Friday. The EUR/USD currency pair slid from an intraday high of 1.1865 to 1.1785, where it is currently trading. The pair touched a high of 1.1200 this week; a level that was last seen in 2018.
Cable (GBP/USD), on the other hand, tanked from a high of 1.3318 on Friday to a low of 1.3193 where it is currently exchanging hands.
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