Coronavirus: Record US job surge despite infection resurgence

The US economy created a record 4.8 million net new jobs last month as economists warn the country’s coronavirus recovery is at risk from a resurgence of infections.

Official figures – released a day earlier than usual because of a public holiday – showed a much bigger leap in re-hiring than financial markets than expected amid a continuing pick-up since April’s unprecedented collapse in employment.

The 4.8 million figure was the most jobs to be created in a single month since comparable records began in 1939 though re-hiring accounted for the bulk of the growth.

The milestone also prompted caution among commentators that a more gradual improvement lay ahead as new waves of coronavirus clusters hit the populous states of Florida, Texas and California – prompting a resumption in local restrictions on movement.

The new measures – and their effect on employment – were not recorded in June’s figures because the jobs data was measured much earlier in the month.

The figures showed the jobless rate falling to 11.1% last month from just over 13% in May.

The rate had stood at 14.7% in April as the effect of the March lockdown on the US economy forced more than 20 million out of the workplace and many into the arms of a government furlough-style scheme.

Millions did lose their jobs altogether as jobless benefit claims showed at the time.

Initial claims over the last week were measured at 1.43 million, down from 1.8 million in the previous seven days.

The chair of the US central bank admitted this week that the economic recovery, from what is expected to be a short but particularly sharp recession, had accelerated at a faster rate than expected.

However, Jay Powell cautioned his remarks by saying the outlook was “extraordinarily uncertain” and would depend on “our success in containing the virus.”

Investors seized on the job figures as evidence of a so-called ‘V’-shaped recovery – with futures markets indicating a stronger opening for shares on Wall St.

In Europe, the FTSE 100 also benefited from the improved US data with many of its constituent companies heavily exposed to America’s economy.

It was trading more than 1.2% higher – building on earlier gains – after the figures were released.

A slight weakening of the dollar saw sterling trading just below $1.25.

Seema Shah, chief strategist at Principal Global Investors, responded: Today’s number certainly adds to the growing evidence of a strengthening economy in early June.

“With all state-wide lockdown orders having been suspended by the time of the survey week, a labour market improvement makes sense.

“These numbers will inevitably take center stage ahead of the Congressional debate on the next round of coronavirus stimulus.

“However, the US government cannot claim victory just yet. High-frequency data suggests that the labour market strength had started to wane later in the month.”

Source: Read Full Article