- July job gains totaled 943,000 payrolls in July, exceeding the median estimate of 870,000 new jobs.
- The unemployment rate fell to 5.4% from 5.9%, beating the 5.7% forecast.
- The print shows job creation persevering as COVID cases rebounded and enhanced unemployment benefits lapsed.
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Job growth in the US exceeded economists’ expectations in July, signaling the labor market’s recovery was mostly unscathed as COVID cases rebounded.
The country added 943,000 nonfarm payrolls last month, the Bureau of Labor Statistics said Friday. The gain beat the median forecast of 870,000 new jobs from economists surveyed by Bloomberg. It also marks a healthy acceleration from growth seen the month prior, which was revised to 938,000 payrolls from 850,000.
The July increase serves as the seventh straight month of job additions and leaves 8.7 million Americans still unemployed. The unemployment rate dipped to 5.4% from 5.9%, also beating the median estimate of 5.7%.
“Despite the improvement, we still have a ways to go with the economy remaining 5.7 million jobs short of the pre-pandemic level. But things are undeniably moving in the right direction,” Greg McBride, chief financial analyst at Bankrate, said.
The labor-force participation rate rose slightly to 61.7%. The measure has taken on more relevance in recent months as businesses face difficulties hiring. The labor-shortage phenomenon has prompted many firms to lift wages in hopes of attracting workers. While conservative economists and politicians have blamed enhanced unemployment benefits for slower-than-expected hiring in the spring, Federal Reserve Chair Jerome Powell has said school closures and virus fears also stifled participation through reopening.
Wage growth exceeded expectations once again, with average hourly earnings climbing 11 cents to $30.54. The uptick in wages – particularly in the hardest-hit service sectors – signals businesses paid more upfront to counter the labor shortage.
The Friday print also reveals businesses continued to hire despite the Delta variant of COVID-19 spreading across the US. Daily case counts leaped from their recent lows throughout July and ended the month at their highest levels since February.
To be sure, the BLS report’s survey period ended in the middle of July, before headlines on the Delta variant gripped the country. The past week also saw state and local governments reinstate some mask-wearing rules to curb the virus’s spread, raising some concerns that another wave of infections could hinder the recovery.
Progress toward the new normal
The government’s monthly employment report gives the most detailed snapshot of which businesses hired the most and previews what the post-pandemic labor market might look like.
The U-6 unemployment rate – which includes people working part-time for economic reasons and those marginally attached to the labor force – dropped to 9.6% from 10.1% on an unadjusted basis.
The leisure and hospitality sector again added the most jobs, with a gain of 380,000 payrolls. Two-thirds of the gains were in restaurants and bars. The sector is still down about 1.7 million jobs from levels seen just before the pandemic.
Local government education followed with a 221,000-payroll increase. The retail sector shed the most payrolls with a decline of roughly 6,000 jobs.
“While local government education added a large number of jobs this month, the private sector is driving the acceleration,” Nick Bunker, economic research director at employment website Indeed, said. “This means the rise in growth this month is not just a statistical quirk. The labor market is gaining momentum.”
About 5.2 million Americans cited COVID-19 as the main reason why their employers closed down. That’s down from 6.2 million in June. The number of Americans naming the pandemic as the primary reason they didn’t seek work held at about 1.6 million.
The share of Americans working remotely fell to 13.2% from 14.4%. While down from last year’s highs, the reading suggests a significant proportion of workers will continue telecommuting even after the pandemic fades.