New jobs, better mood: US economy surprisingly gives hope

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No other country in the world has as many corona infections as in the United States – this has also plunged the economy into recession and destroyed 20 million jobs. But now there is a glimmer of hope.

The US industry has surprisingly returned to growth, sending an important signal of recovery in the corona crisis. The purchasing manager index rose to 52.6 points in June from 43.1 points in May, the highest level in over a year, according to a company survey by the Institute for Supply Management (ISM). In April the barometer was at its lowest level in eleven years. Analysts interviewed by Reuters had only expected an increase to 49.5 points in June. With a value of over 50 meters, the barometer now signals growth again.

However, this says little about the pace of recovery in the US, said Commerzbank expert Christoph Balz. “In particular, it doesn’t mean that the situation is as good as it was before the crash.” Overall, the US economy is still deep in recession due to the virus pandemic. This is also shown by a look at the real estate market. Construction spending in the US fell 2.1 percent in May to $ 1.356 trillion, the Washington Department of Commerce said. Experts, on the other hand, had expected an increase of 1.0 percent, after a revised decline of 3.5 percent in April.

New momentum on the job market

After the wave of layoffs in US companies in the wake of the corona crisis, job creation also got going again. The bottom line was that 2.36 million jobs were created in June, according to the monthly survey published by the personnel service provider ADP on Wednesday. Experts interviewed by Reuters had expected 3.0 million. At the same time, the figures for May were revised: According to this, 3.06 million jobs had already been created at that time. Initially, there was talk of cutting 2.76 million jobs.

The ADP numbers are considered a good omen for the government’s labor market report due on Thursday, which includes jobs in the private sector and jobs in the public sector. Here, experts expect an increase of three million jobs outside of agriculture, after an increase of 2.5 million in May.

Corona wave continues to roll

A wave of layoffs had previously swept across the country: more than 20 million Americans lost their jobs in April. However, the risks associated with the pandemic have not yet been ticked off for the US: US health expert Anthony Fauci recently warned that the US could exceed the threshold of 100,000 newly infected people per day if the Americans did not wear masks and did not keep a minimum distance.

There are currently around 40,000 new infections per day in the United States. “It is questionable whether the improvements in the labor market can contribute to an increased willingness to take risks,” said economist Ulrich Wortberg from Helaba. He points out that some corona restrictions have been extended or loosening has already been reversed: “In this respect, it will probably take a long time before a kind of normality on the labor market returns.”

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