US jobless rate declined to 8.4% in August

The number of permanent job losses rose by more than 500,000 to 3.41 million

The US economy suffered its sharpest downturn since at least the 1940s in the second quarter of this year. AFP

The US labour-market rebound extended for a fourth month in August, offering hope that the economy can continue to recover despite a persistent pandemic and Washington’s standoff over further government aid to jobless Americans and small businesses.

The unemployment rate fell by more than expected, by almost 2 percentage points, to 8.4 per cent.

Nonfarm payrolls - a compiled name for goods, construction and manufacturing companies in the US - increased by 1.37 million, including the hiring of 238,000 temporary census workers, according to a Labour Department report on Friday.

The dollar and yields on 10-year treasuries rose after the report, while US stock futures reversed losses.

The median estimates in a Bloomberg survey of economists called for a 1.35 million gain in nonfarm payrolls and an unemployment rate of 9.8 per cent. It was 3.5 per cent in February, matching a half-century low.

The data signals progress in the labour market is continuing though at a more moderate pace since the initial bounce back in hiring, with payrolls remaining about 11.5 million below the pre-pandemic level. The pace of further gains likely hinges on whether America improves control of coronavirus infections, as well as an end to the stalemate in Congress over another stimulus package.

One troubling figure from the report - the number of permanent job losers rose by more than 500,000 to 3.41 million, after being little changed in July. The majority of the 10.3 million unemployed - about 6.16 million - continue to be on temporary layoff.

The payroll figures showed broad-based gains across industries. Retail added about 249,000 jobs, more than in the prior month, while professional business services increased by 197,000 and transportation and warehousing was up about 78,000.

But the gains in leisure and hospitality businesses, such as restaurants, that had driven prior months cooled significantly in August with a rise of 174,000, compared with 621,000 in July.

Adjusted for the misclassification of workers who should have been labelled as unemployed -a problem plaguing the data in recent months - the jobless rate would have been 0.7 percentage point higher in August, the Labour Department said.

The report also showed a strong gain in one key figure, the employment-population ratio, which jumped 1.4 percentage point to 56.5 per cent, though that’s still well below the February’s level of 61.1 per cent.

The much better-than-expected improvement in the jobless rate spanned demographic groups, though White and Hispanic Americans saw larger declines in the rate compared with Asian and Black Americans.

Additionally, the gender gap narrowed. Among adult women, the unemployment rate fell 2.1 percentage points to 8.4 per cent, compared with a 1.4-point drop among men, to 8 per cent.