US hiring slows in July after coronavirus outbreak intensifies and economy faces worst decline on record

Payrolls rise by 1.7 million in July, whereas 4.7 millions jobs were added in June amid a reemergence of the novel coronavirus

The July jobs report showed a slowing recovery from the historic losses suffered during the coronavirus pandemic, with just 1.7 million jobs added throughout the month compared to June's staggering rebound of 4.7 million jobs.

The unemployment rate fell to 10.2 percent — a less than one percent drop — in July, when Covid-19 outbreaks intensified across the country and some states once again implemented or encouraged strict social distancing measures.

At least 22 million jobs were lost during the initial months of the outbreak in the US, as governors across the country implemented strict lockdown orders requiring millions of businesses and venues to close. But those jobs began returning in a significant way by May, when the unemployment rate fell to 13.3 percent.

Economists said the slowdown was the result of stalled stimulus plans in Congress, as leading infectious disease experts warned the country could continue to suffer a rise of infections without a cohesive national strategy to combat the virus.

Josh Lipsky, director of the Atlantic Council’s global business and economics program, told The Independent in a statement: “Today’s report sends one clear message: Without more stimulus the bottom could fall out from the American economy.”

“Millions of unemployed citizens, renters across the country, small business owners, and every state government are asking for help in a time of crisis,” the statement continued. “When your house is on fire you don’t ask the fireman how much the hose costs. Every day Congress delays raises the chance of a double-dip recession."

The slowing labour market is more bad news for President Donald Trump, who is lagging in opinion polls behind former Vice President Joe Biden, the presumptive Democratic Party nominee for the 3 November election.

The economy, which entered into recession in February, suffered its biggest blow since the Great Depression in the second quarter, with gross domestic product dropping at its steepest pace in at least 73 years.

Still, the president celebrated the latest figures in a tweet on Friday morning, writing: "Great jobs numbers!"

Infections of the respiratory illness soared across the country last month, forcing authorities in some of the worst-affected areas in the West and South to either shut down businesses again or pause reopenings, sending workers back home. Demand for goods and services has suffered.

Last month's slowdown in job growth occurred across all sectors, with the exception of government. The leisure and hospitality industry hired 592,000 workers, accounting for about a third of nonfarm payrolls. The bulk of the jobs were at restaurants and bars. Retail employment rose by 258,000 jobs, with almost half of the gain in clothing and accessories stores.

Professional and business services added 170,000 jobs, concentrated in the temporary help services. Government employment increased by 301,000 in July, artificially boosted by hefty gains in state and local government education.

The model that the government uses to strip out seasonal fluctuations from the data normally anticipates education workers to drop off payrolls in July. This, however, happened earlier because of the pandemic, leading to a big gain in July.

US stocks opened lower while the dollar rose against a basket of currencies. U.S. Treasury prices were trading largely higher.

Reuters contributed to this report