Today’s Big Deal: A dismal August jobs report.
Economy adds just 235K jobs in August as delta hammers growth
The U.S. added 235,000 jobs in August and the unemployment rate fell to 5.2 percent as the economy appeared to falter under surging coronavirus cases, according to data released Friday by the Labor Department.
- Economists had expected employment growth to slow slightly in August to a gain of roughly 750,000 jobs, according to consensus forecasts, amid falling consumer confidence and disruptive school closures.
- Declines in restaurant reservations, air travel and other key drivers of the recovery also raised red flags about the August jobs haul.
“Today’s report has the delta variant written all over it. It is clear that the recent surge in COVID-19 cases is a strong headwind to the labor market,” wrote Nick Bunker, economic research director at Indeed. I break it down here.
Delta homes in on pandemic-sensitive industries: The August jobs report showed setbacks in sectors of the economy hit hardest by the pandemic and crucial to the comeback from its economic blow.
- The leisure and hospitality sector did not add any net jobs in August as a 42,000-job decline in restaurants and bars wiped out a 36,000-job gain in arts and entertainment.
- Employment in retail, another hard-hit sector, also fell by 29,000 thanks to steep losses at grocery stores and building material and garden supply stores.
“The industry breakdown in employment growth shows clear signs that the increased COVID-19 spread is behind this relatively weak number,” Bunker wrote. “Yet, the labor market is still recovering.”
Signs of resilience: While job growth slowed significantly in August, the first full month since the delta surge picked up in mid-July, the labor market still showed signs of holding strong.
- Labor force participation stayed even at 61.7 percent in August and the employment to population ratio — a broader gauge of job market strength — ticked up 0.1 percentage points to 58.5 percent.
- The number of Americans who have been jobless for 27 weeks or longer, known as the “long-term unemployed,” also dropped from 3.4 million to roughly 3.2 million. Those who suffer long-term unemployment often struggle to return to work and are hired at lower rates than those without long periods of joblessness.
Stronger days…behind? Upward revisions to June and July’s blockbuster jobs gains were another positive sign for the economy. June’s job haul was revised up from 938,000 to 962,000, and July’s was revised up from 943,000 to 1,053,000 — the first seven-digit job gain since August 2020.
“The underlying momentum is still there. We just have to see if we can keep up the pace until this surge is behind us,” Bunker said.