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Virus warning over record US jobs recovery

Donald Trump
Donald Trump

American employers hired a record 4.8m workers in June as the country's economy bounces back - but experts have warned this stellar recovery could be stopped in its tracks by surging coronavirus cases.

The world’s biggest economy shed more than 20m jobs in April at the height of the lockdown but the US has now regained a third of those workers in just two months after 2.7m jobs were added in May - suggesting the country has begun a rapid "V-shaped" recovery.

President Donald Trump said the figures were “spectacular news for American workers and American families”, but they came as the US passed 50,000 daily infections for the first time.

The surge in cases includes 10,000 in a single day in Florida and has prompted more than 20 states to pause reopening and reimpose some restrictions, fuelling fears over the sustainability of the jobs fightback.

David Page, head of research at Axa Investment Management, said that over half of the US’s job gains in June came from re-opening retail, leisure and hospitality industries.

He said: "It is likely that job growth in these sectors slows next month and could even reverse in some areas. This is the real threat to the US recovery outlook.”

The June job creation figures were higher than the 3.2m expected by economists and the biggest increase since records began in 1993. They bring America's unemployment rate down to 11.1pc, still well above the 50-year lows of 3.5pc earlier in 2020.

Applications for unemployment benefits also offered a further sign of lingering uncertainty as they fell by less than expected, to 1.43m in the week to June 27.

Economic Intelligence newsletter SUBSCRIBER (article)
Economic Intelligence newsletter SUBSCRIBER (article)

The US Federal Reserve has unleashed massive policy stimulus to support the economy during the outbreak, including unlimited quantitative easing, while the Government is topping up unemployment benefits by $600 a week until the end of the month.

But with four months left until Mr Trump attempts to win re-election to the White House in November’s presidential election, the number of unemployed still remains 12m above pre-pandemic levels.

Michael Pearce, of Capital Economics, said: “With the spread of the virus accelerating again, we expect the recovery from here will be a lot bumpier and job gains far slower on average.”