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U.S. Unemployment Beats Projections, Sinks to 8.4 Percent

  • Non-farm payrolls increase by 1.37 million in August as unemployment rate falls to 8.4 percent
  • Economic trends move in positive direction, but more workers find themselves moving from temporary to permanent layoffs
  • Economists urge new round of economic stimulus to encourage consumer spending and prevent layoffs

Data released Friday by the Labor Department shows that non-farm payrolls in the United States increased by 1.37 million in August while the unemployment rate dropped to 8.4 percent. This figures beat projections of a 1.32 million payroll increase and unemployment rate of 9.8 percent.

Government hiring was a significant factor in the change, with the U.S. Census Bureau adding 328,000 people to its payrolls as it proceeds with data collection for the 2020 census. Other major gains occurred in retail, leisure and hospitality, and education and health services.

Jobless claims last week fell to 881,000, with another 759,482 filing through a new unemployment assistance program geared to gig workers and self-employed people who cannot file traditional jobless claims. The significant drop was largely a result of the Labor Department changing its methodology on jobless claims, making it difficult to compare the numbers with the previous week.

Despite the positive news, employment continues to be a concerning factor during the economic recovery from the COVID-19 pandemic. While the tally of worker on furlough or temporary layoff has dropped, the number of employees returning to a job after a layoff has also fallen. Permanent job losses have increased due to business closures or companies reopening with smaller workforces. Job listings have become more scarce in several industries, including hospitality and tourism as well as higher wage positions in sectors like finance and banking.

Some employers have signaled that they will likely need to cut their payrolls, and economists have warned that a wave of small business closures may occur over the winter. Consumer spending could also shrink during this period as enhanced unemployment benefits come to a close. Congress adjourned in August without passing a new round of COVID-19 relief; while discussions have resumed, they continue to be hampered by partisan disagreements.

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