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Delta impedes US hiring but major firms announce recruitment push

·3-min read
US companies hired about half as many workers as expected in August, according to data from payroll services firm ADP (AFP/Olivier DOULIERY)

The recovery in the US labor market has been battered by the surge of the Delta variant of Covid-19 that has slowed hiring, but big companies like Walmart and Amazon are still looking for thousands of workers.

While the return of American children to in-person schooling and the impending end of government pandemic jobless benefits could ease employers' struggles to fill open positions, some workers may opt to remain on the sidelines as infections again rise.

Private American companies hired just 374,000 more workers in August, according to payroll services firm ADP, just over half what economists had expected and a sign that the Delta variant is undermining the job market's recovery.

Meanwhile, the US manufacturing sector continued to grow last month, but employment contracted and "hiring difficulties at panelists' companies were the most significant hurdle to further output," said Timothy Fiore, head of the Institute for Supply Management's (ISM) manufacturing survey.

Counterbalancing that downbeat data, retail giants Amazon and Walmart each announced Wednesday big pushes to hire tens of thousands of workers.

Walmart said it is looking for 20,000 employees to fill permanent full- and part-time roles in its Walmart and Sam's Club warehouses in the United States.

Amazon is holding a global career day to fill 40,000 corporate, tech and hourly positions in the United States.

The vast majority of those positions are new roles to handle its overall rapid growth, as well as for Project Kuiper, which aims to provide high-speed internet by satellite, a spokesperson for the online shopping giant told AFP.

- What about the stimulus? -

The mixed data pose a challenge for the Federal Reserve, which has signaled it wants to begin to ease up on its massive stimulus efforts later this year but is watching to be sure the job market has made "substantial progress" in its recovery.

The private hiring data "has highlighted a downshift in the labor market recovery," ADP chief economist Nela Richardson said.

"We have seen a decline in new hires, following significant job growth from the first half of the year."

The report is closely scrutinized as a preview of the critical government employment data due out Friday, which is expected to show a gain of 750,000 jobs nationwide last month and the unemployment rate ticking down to 5.2 percent from 5.4 percent in July.

ADP's data can differ widely from the official report, but Ian Shepherdson of Pantheon Macroeconomics said he has now trimmed his forecast, predicting employment will rise by just 400,000 positions due to the variant.

"We expect a further Delta hit in September, though we hope it will be offset, at least partly, by the effects of school reopening and the ending of enhanced unemployment benefits. But the uncertainties are huge," he said.

The leisure and hospitality sector was hardest hit in the first wave of mass layoffs as the pandemic began and has been affected by new rules requiring mask wearing to deter the variant's surge.

Nonetheless, ADP said the sector added a modest 201,000 positions last month, improving on July.

American manufacturing also has been impacted by supply snarls but continues to grow amid increasing demand, and the ISM index rose slightly from July to 59.9 percent, while new orders and output accelerated by about two points.

Still, Shepherdson said manufacturing was primed for a pullback, pointing to surveys from China which tend to predict the path of US industry and show the sector's advance tapering.

"Stepping back from the Covid noise, the underlying rate of growth of manufacturing output probably is slowing, both in the Unites States and elsewhere, but this was inevitable, given the unsustainable strength of the initial rebound," he wrote in an analysis.

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