US labor market could fully recover from pandemic losses in 7 months

Labour market

Reports from the US Department of Labor show a good rate of decline in the unemployment rate and a recovery in American employment. Economists see clear signs of a full "pre-pandemic" recovery in the US labour market in the coming months.

Market analysts believe that there are sufficiently strong factors for the projections of a rapid US labor market recovery to materialize.

The latest reports from the Labour Department show a strong trend

Non-farm payrolls have risen for the past three consecutive months, up 269,000 jobs in April, 583,000 in May and 850,000 in June above economists' estimates of 706,000.

The unemployment indicator the number of weekly initial claims for unemployment benefits also fell steadily, beating market expectations.

The lack of additional unemployment payments will encourage Americans to go to work.

The $300 a week additional unemployment benefits will expire in September. In addition, fifteen US states started cutting benefits in June and unemployment claims data shows that the move is working. Unemployment insurance filings fell the most since the beginning of May last week and hit a new pandemic low.

Fed Chairman Jerome Powell said at a congressional hearing on 22 June that the US expects a "really strong rate of job creation" from July onwards, as mass vaccination makes fears of a coronavirus pandemic disappear and schools reopen.

The Federal Open Market Committee's latest projections show the unemployment rate will fall to 3.8% by the end of next year, which compares with a "pre-pandemic" low of 3.5%.

Rapidly rising wages in the USA

The Congressional Budget Office also said last week that the labour market should return to pre-crisis wage levels by the middle of 2022.

Insider analysts calculate that if the June pace of job additions continues it will bring total jobs back to pre-pandemic levels as early as February 2022.

The improving labour market will benefit the entire United States economy, with the improved performance reflected favourably in the stock market by rising shares.