U.S. job growth slowed further in August as financial assistance from the government ran out, threatening the economy's recovery from the COVID-19 recession.
Nonfarm payrolls increased by 1.371 million jobs last month after advancing 1.734 million in July, the Labor Department's closely watched employment report showed on Friday. The unemployment rate fell to 8.4% from 10.2% in July. Economists polled by Reuters had forecast 1.4 million jobs added in August and the unemployment rate sliding to 9.8%.
Companies from transportation to manufacturing industries have been announcing layoffs or furloughs, putting pressure on the White House and Congress to restart stalled negotiations for another fiscal package. With just two months to go until the presidential election, the jobs situation likely will provide political ammunition for both Democrats and Republicans.
Programs to help businesses pay wages have either lapsed or are on the verge of ending. A $600 weekly unemployment supplement expired in July. Economists credited government largesse for the sharp rebound in economic activity after it nearly ground to a halt following the shuttering of businesses in mid-March to control the spread of the coronavirus.
Friday's report is one of just two monthly labor market scorecards left on the calendar before the Nov. 3 presidential election. Employment growth peaked at 4.791 million in June.
Most of the job gains have been workers being recalled from furloughs or temporary layoffs. Though new COVID-19 infections have subsided after a broad resurgence through the summer, many hot spots remain.
United Airlines said on Wednesday it was preparing to furlough 16,370 workers on Oct. 1. American Airlines has announced its workforce would shrink by 40,000, including 19,000 involuntary cuts. Ford Motor Co said it was targeting 1,400 U.S. salaried jobs for elimination by year end. Mass transit rail operators are also eying furloughs.
A report this week from the Federal Reserve based on information collected from the U.S. central bank's contacts on or before Aug. 24 showed an increase in employment. The Fed, however, noted that "some districts also reported slowing job growth and increased hiring volatility, particularly in service industries, with rising instances of furloughed workers being laid off permanently as demand remained soft."
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