TOPLINE The United States added back a fewer-than-expected 235,000 jobs in August, according to data released Friday by the Labor Department—marking a significant slowdown from July and the labor market’s worst monthly showing since January, as experts note the pandemic’s resurgence has started to curtail the economic recovery.
KEY FACTS
- August’s job additions were much lower than the 720,000 new jobs economists were expecting, according to Bloomberg data, and they represent a significant decline from the roughly 930,000 jobs added back in July.
- Despite the slowdown, however, the unemployment rate of 5.2% fell from 5.4% in July to its lowest point during the pandemic, but is still well above pre-pandemic levels of less than 4%.
- There are now 8.4 million unemployed people in the United States, falling slightly since July—by about 300,000—and still markedly higher than 4 million in February 2020, the government said.
- According to the report, industries with notable job growth included professional services, transportation, warehousing and manufacturing, while employment in retail trade actually declined over the month.
- Reflecting rising uncertainty over the pandemic’s trajectory, employment in leisure and hospitality was virtually unchanged last month after adding an average of 350,000 jobs in each of the prior six months.
- Meanwhile, the report revealed stark labor-market disparities by race, with the unemployment rate among Black Americans ticking up to 8.8%, from 8.2% in July, despite the overall decline.
CRUCIAL QUOTE
“Today’s jobs report reflects a major pullback in employment growth likely due to the rising impact of the delta variant of Covid-19 on the U.S. economy,” Tony Bedikian, the head of global markets at Citizens Financial, said in a Friday note. “The virus is still weighing heavily on the U.S. jobs recovery, but we may also be seeing tectonic shifts in the workforce as the number of reported job openings remains high.”
SURPRISING FACT
The unemployment rate hit a record high of 14.7% at the height of pandemic uncertainty in April 2020. Overall, the U.S. economy has added back roughly 17 million of the 22 million jobs lost at the height of pandemic uncertainty in March and April of last year.
KEY BACKGROUND
The disappointing jobs report comes just days after ADP’s monthly employment report highlighted a “downshift” in the labor market recovery marked by a decline in new hires last month. “The delta variant of Covid-19 appears to have dented the job market recovery,” Mark Zandi, the chief economist of Moody’s Analytics, said in a statement alongside the report, adding that the labor market remains strong, but well off its performance in recent months. “Job growth remains inextricably tied to the path of the pandemic.” Other experts have warned the post-Covid labor market recovery could drag on for years, and despite strong gains in past months, the Federal Reserve last week said its performance was still too “turbulent” to warrant a change in pandemic-era monetary policy. Friday’s disappointing report should only bolster that argument.
