US unemployment falls to 10.2% in July, beating expectations

The rate had risen to an all-time high of 14.7% in April

US unemployment has ballooned during the pandemic, wiping out most of the jobs created since the 2008 financial crisis. AFP

Unemployment in the US fell to 10.2 per cent in July, from 11.1 per cent in the previous month as payrolls rose higher-than-expected by 1.76 million.

Economists had expected payrolls to gain 1.48 million last month. Payrolls in the manufacturing sector rose 26,000, much lower than the expected 261,000, according to the the country’s Bureau of Labour Statistics. US unemployment has ballooned during the pandemic, wiping out most of the jobs created since the 2008 financial crisis. The unemployment rate rose to an all-time high of 14.7 per cent in April at the height of strict lockdown measures.

The US has been the worst affected major economy during the coronavirus pandemic. The country accounts for over 5 million infections, equivalent to more than 26 per cent of total cases globally, according to Worldometers, which tracks the pandemic. The US has registered 162,836 deaths so far from Covid-19.

The latest non-farm payroll data suggests that the US economy was “moving in the right direction”, said Naeem Aslam, chief market analyst at Ava Trade.

"The biggest question is that what this number means for the US policy makers who are likely to miss their own defined deadline today. But given the data, it is probable that policy makers may not provide a massive stimulus package which Democrats have been fighting for,” he added.

Democrats have tabled a $3.5 trillion stimulus plan, which they say is more adequate to cover the needs of American businesses and workers furloughed during the pandemic. Republicans, who control the Senate have presented a conservative $1tn plan to boost unemployment benefits and shield businesses from lawsuits stemming from the distress caused by the coronavirus pandemic.

Republicans are opposed to increasing unemployment benefits to Americans laid off during the pandemic. A $600 per week unemployment benefit initiated during the health crisis was allowed to expire last week as Republicans and Democrats failed to reach an agreement to extend the programme.

Fitch ratings agency revised its outlook on the US' AAA rating to negative last week as the world’s largest economy's national debt topped $26.5 trillion (Dh97tn) in June.