The pace of recovery in the US jobs market slowed again in August as the coronavirus’s impact on the economy appeared to be broadening.

Employers added 1.4m new jobs and the unemployment rate dropped to 8.4% last month, dropping below 10% for the first time since the pandemic took hold, the labor department announced on Friday.

The number of new jobs was markedly lower than in recent months. US employers added 1.8m jobs in July, 4.8m in June and 2.5m jobs in May. August’s figure was also boosted by the temporary hiring of 238,000 people to conduct the 2020 Census.

The racial disparities in unemployment remained. The unemployment rate for Black Americans (13%) was almost double the rate for whites (7.3%). The rate for Latinx Americans was 10.5% and for Asians, 10.7%.

The news comes as Congress returns from its summer recess next week amid a heated debate over a new round of stimulus payments and signs that the pandemic recession is unlikely to fade away anytime soon.

Weeks of negotiations have failed to reach a consensus and discussions are already breaking down with top Democrats attacking Republican proposals for a “skinny” stimulus package that will cost far less than the $2.2tn signed by Donald Trump in March.

“Republicans may call their proposal ‘skinny’, but it would be more appropriate to call it ‘emaciated’,” Chuck Schumer, the Democratic Senate minority leader, wrote Thursday to his members. “Their proposal appears to be completely inadequate and, by every measure, fails to meet the needs of the American people.”

While the unemployment rate is falling there are worrying signs that the rout in the jobs market is shifting. Temporary layoffs due to quarantine measures are being replaced with permanent cuts, and losses are spreading beyond the entertainment, leisure and hospitality sectors that were hit hardest in the early months of the pandemic.

Global outplacement and business and executive coaching firm Challenger, Gray & Christmas has been compiling a survey of job cut announcements since 1993. As opposed to the monthly jobs figures, which are historical, the survey gives some insight into likely future cuts. “Just through August we have seen more job cuts announced than any other entire year since we started recording these numbers,” said Andy Challenger, the senior vice-president. “It’s pretty clear that, at least from a labor standpoint, there is still extreme turmoil.”

US-based employers announced jobs cuts of 115,762 in August, 116% higher than the August 2019 total of 53,480. While August’s total is 56% lower than the 262,649 job cuts announced in July, it is the highest total in August since 2002, when 118,067 job cuts were announced.

So far this year, employers have announced over 1.9m cuts, 231% higher than the 592,556 cuts tracked in January-August of 2019 and surpassing the previous record annual total of 1,956,876 recorded in 2001.

“The bomb that went off at the beginning of the pandemic was centered around entertainment, leisure, hotels, bars, small businesses retail. Now we have started to see that shift to other sectors of the economy as the crisis has shifted from a health to an economic crisis,” said Challenger.

For the first time in August transportation led the industry announcing the most cuts as airlines announced massive cuts. Such a move might be expected as the coronavirus continues to spread and dampen demand for travel. But the services sector – jobs in accounting, administration, recruitment and legal – made the third highest number of layoff announcements. “Those are jobs that could have been done remotely,” said Challenger. “Those jobs were safe for a while but over the last couple of months they have been put back on the chopping block as companies face some real economic headwinds and a darker outlook for future revenues.”

Government jobs too are set to go as states and cities cope with sharp drops in tax revenues and rising expenses. Some 11,800 government job cuts were announced in the first nine months of 2019, so far this year that figure has risen more than fivefold to 61,400.



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