The US economy was expected to show a small rebound in job creation last month after a dip in December, as the recovery continues to struggle through the surge of coronavirus infections during the winter months.
According to the consensus of economists’ forecasts heading into Friday’s report by the US labour department, non-farm payrolls were projected to show a gain of 50,000 in January, with the unemployment rate unchanged at 6.7 per cent.
If confirmed, the return to job growth will reassure US economists and policymakers that the decline in December may have only been temporary and tied to a wave of new restrictions on activity to contain the pandemic, which are now easing.
However, the pace of new employment in the US economy remains extremely lacklustre, highlighting the travails of a labour market that is still operating far from full capacity and nowhere near its pre-pandemic levels.
The weakness of the US jobs market has been one of the main catalysts for president Joe Biden’s drive to enact a new $1.9tn economic stimulus plan during this first weeks in the White House.
While Biden has engaged in some negotiations with moderate Republicans on a compromise, he is leaning towards passing a version of it alone, with only Democrats voting in favour, to avoid it being watered down excessively.
The potential for large-scale new economic stimulus, along with hopes for widespread vaccination distribution, have bolstered confidence in a significant US economic recovery in 2021, after last year’s contraction.
However, Jay Powell, the Federal Reserve chair, and other US policymakers have warned that the US economy remains vulnerable to setbacks because of the trajectory of the virus as well as the structural shifts in the economy, including long-term scarring, associated with the pandemic.
Source: Economy - ft.com
