AmCham Colombia presents a new edition of the United States Observatory, a weekly update on the most relevant news and information regarding the economy and trade of this country.
Bogota, 8 October 2020 (AmCham Colombia).- The latest employment situation report before the election shows that, although the recovery of jobs lost during the pandemic continues to progress, as we mentioned in previous weeks, it continues to lose pace and also provides new evidence that reinforces the thesis that the economy will recover more and more slowly.
According to the U.S. Bureau of Labor Statistics, non-agricultural payrolls increased by 661,000 in September, below 850,000. In May these grew 2.7 million, in June 4.8 million, in July 1.8 million and in August 1.5 million. Still, total employment remains 10.7 million below the February level, showing that there is still a large gap to close, which will take some time given the current rate of recovery, the growing number of infected threatening further closures, and less fiscal stimulus due to the lack of an agreement in the Senate given the election.
Unemployment rate fell to 7.9% (vs. expected from 8.2%) September from 8.4% observed in August. However, the setback is partly explained by the drop in the participation rate from 61.7% in August to 61.4% in September (in February it was 63.4%). That said, the official number of unemployed is 12.58 million people, but by measurement, this number only reflects individuals who are actively looking for employment. Much of the population who have lost their jobs, especially in sectors such as leisure and hospitality, are not actively looking for work as there are no vacancies available and can continue to claim some kind of unemployment benefit.
Accordingly, the Department of Labor's latest unemployment insurance application report showed that in the week ended September 12, the total number of people receiving unemployment benefit stood at 26.5 million (nearly 500 thousand above the previous week).Therefore, the "true" number of unemployed should be somewhere in between the official number of 12.58 million and the number of beneficiaries of the total programme of 26.5 million.
Weak labour market dynamics, accompanied by less fiscal stimulus due to the lack of a Senate agreement over the election cycle and the growing number of COVID-19 cases that could lead to further containment measures (as in Europe), will be a major challenge to household spending in the fourth quarter of the year , thus increasing the chances that the speed in recovery will continue to decrease.