Friday 4th June 2021
Far from the pre-crisis level
US labor market takes off – but slowly
In the US, significantly more new jobs were created in May than a month ago as public life picked up. However, companies complain that government aid has prevented many people from looking for a job.
The US economy created twice as many new jobs in May as in the previous month and still fell short of expectations. The government in Washington announced that 559,000 new jobs were created outside of agriculture. Economists, on the other hand, had even expected 650,000 – after an increase of only 278,000 in March. The unemployment rate fell from 6.1 to 5.8 percent and thus slightly more than expected. Private households are surveyed for these statistics, while companies and authorities are surveyed for the number of employees.
According to the Ministry of Labor, the number of people who did not work full-time against their will was 5.3 million. That was almost as many as in April, but 0.9 million more than in February 2020. The number of Americans who are currently not counted as part of the workforce was 6.6 million as in the previous month, down 1.6 Millions higher than in February 2020. The number of people discouraged by unsuccessful job searches was 2.0 million. It was almost unchanged on a monthly basis, but 0.5 million higher than in February 2020.
“The increase in employment fell short of the high expectations for the second time,” said economist Dirk Chlench from the Landesbank Baden-Württemberg (LBBW). The opening up of the economy, made possible by vaccination progress and falling new corona infections, created new jobs, especially for service providers – for example in the leisure and hospitality industry. Nevertheless, 7.6 million jobs are still missing compared to the pre-Corona level.
The world’s largest economy is running smoothly again: According to the industrial nations organization OECD, gross domestic product will grow by a strong 6.9 percent this year, and by a further 3.6 percent in 2022. “Rising wages, combined with government transfers and accumulated household savings, will fuel consumption,” said the OECD.
Business associations say, however, that the extensive government aid is preventing many unemployed people from looking for a job. There are currently 8.1 million vacancies – more than ever before. The Republican governors in 25 states – including Florida and Texas – therefore want to phase out the federal government-funded unemployment programs starting next Saturday. The benefits that are now being prematurely terminated include a weekly grant of $ 300.
The US Federal Reserve headed by Fed Chairman Jerome Powell wants to continue its loose monetary policy until noticeable further progress has been made on the way to full employment and price stability. “It will take some time before the Fed establishes substantial progress with its employment target,” said economist Bastian Hepperle from Bankhaus Lampe.