As the global markets digest the latest news of US President Donald Trump testing positive for Coronavirus, economic labor data released Friday shows a slowing US economic recovery as the country quickly approaches a presidential election on November 3rd. The Nonfarm payrolls report, published the first Friday of every month, is the measure of the number of workers in the U.S. excluding farm workers and workers in a handful of other job classifications.
October’s report showed a less than expected rise in new jobs created in September at 661,000. Dow Jones economists predicted that the number would be around 800,000, while the unemployment rate dropped to 7.9% for the same time period. The report suggests that the US economic recovery may be stalling amid new spikes in Covid-19 cases across US states as people try to get back to work and school.
More importantly, this will be the last NFP report before the upcoming US Presidential election and voters and pundits may use the data to continue their support for either of the candidates.
The data suggests that the lower than expected unemployment rate was actually driven by a 0.3% drop in the labor participation rate to 61.4%, indicating that some 700,000 people have left the US workforce altogether in the month of September. At the same time, the measure of unemployed along with those forced to work part-time or discouraged from employment fell to 12.8% from 14.2%.
Markets had little reaction to the report, in part due to the results, which were not above or below analysts expectations and likely were overshadowed by the news that US President Donald Trump has confirmed he has contracted Coronavirus. The new uncertainty throws new challenges into an already tumultuous economic situation which is predicated on support from a new stimulus package being negotiated in Congress and a further expansion of a federal strategy on dealing with Covid-19 as the winter months approach.