The job creation in August represents a continuous improvement in the US economy, but a full recovery will not materialize until the coronavirus pandemic is under control, Eric Rosengren, president of the US Federal Reserve in Boston, said Friday.
Unemployment fell to 8.4% as the number of non-farm workers rose 13.7 million last month, the Department of Labor reported in numbers well above Wall Street's expectations. The decline in the unemployment rate was particularly pronounced, falling 1.8 percentage points from the July level as the labor market continued to recover.
While recognizing the "significant improvement", Rosengren said the economy remained under pressure.
"We have a long way to go before we fully recover, but I'll say this employment report has been very positive," he told CNBC's Steve Liesman during an interview on The Exchange.
He noted that many of the increases were in retail and hospitality. Both areas were hard hit during the pandemic as shoppers and guests stayed at home due to government-imposed restrictions to control the spread of the coronavirus.
These areas still have a long way to go before they return to pre-pandemic levels, Rosengren added.
"With 8.4% unemployment, this is a very significant recession and I think it will be a while before all of these people are back, especially when it is taking us a long time to not only resolve the pandemic but also resolve it A viable and safe vaccine that is widely used, "he said. "I think it will really take a while before we see a completely normalized market."
For its part, the Fed has tried to drive the recovery by anchoring short-term interest rates near zero and implementing a number of credit and liquidity programs. In addition, officials recently outlined a new approach to inflation that is effective in keeping interest rates low until unemployment drops well below current levels.
Some market participants expect the Fed to further consolidate its position by outlining specific metrics it needs to see before a rate hike. However, Rosengren said that this was not likely, at least in the near future.
"We are already doing a lot to stimulate the economy," he said. "I think we need to consider what is the appropriate forecast for the future, but I think at this point the market understands that we have no plans to hike rates anytime soon."