US jobs recovery loses steam
The US recovery slowed sharply in July as a second wave of coronavirus triggered the weakest month for jobs growth since Covid first struck.
The world's biggest economy added just 1.8m jobs last month, payroll figures show - less than half the 4.8m rise in June. It is the clearest sign yet of a faltering bounceback after infections surged in the South and West.
America's jobless rate fell to 10.2pc from 11.1pc, but the latest data showed an extra 10.6m Americans are unemployed compared to before the pandemic.
It poses a fresh challenge to President Donald Trump's bid for re-election in November, and will pile pressure on Democrats and the White House to agree another emergency support package for households after a $600 (£460) benefit top-up for claimants expired last month.
Seema Shah, chief strategist at Principal Global Investors, said the jobs market was static in July.
She added: "With Congress failing to agree on a new fiscal stimulus package yet, the risk is that a policy failure drains the tentative strength that had been creeping back into the economy in recent months. With the unemployment rate still sitting above 10pc, the pressure in Congress is still on."
The US suffered its biggest blow since the Great Depression in the second quarter. Its economy has shrunk more than 10pc across the first half of 2020, with more than 20m jobs lost in April alone.
The jobs recovery has been hampered by a rise in infections as states reopen, forcing the powerhouses of Texas, California and Florida to reimpose restrictions. Covid-19 has claimed 160,000 lives in the US so far.
Despite the renewed restrictions on bars and restaurants, the leisure and hospitality sector added 592,000 jobs – around a third of the total – albeit well down on a rise of 2m in June.
Michelle Meyer, chief US economist at Bank of America Merrill Lynch, said: “It’s still a long road ahead in terms of fully recovering the labour market, but progress is being made.”
