The Employment Situation for July 2021

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The big headline number from the latest jobs report is 850 thousand new jobs added over the last month, which is certainly good news and underscores the quickening pace of the current economic recovery.

More than 40% of those new jobs went to the leisure and hospitality industry, which has collectively accounted for more than 50% of the total new jobs over the last 3 months as bars and restaurants have reopened and both business and entertainment travel have largely resumed.

That said, leisure and hospitality industry employment is still down from pre-pandemic levels by almost 13%, so there is much recovery still to come on that front.

With the exception of the construction industry which experienced a very minor employment reduction, just about every industry sector added jobs last month - with notable gains going to the education sector as schools continue opening up for in-person instruction, as well as the government and business services sectors. 

Despite all of these positive jobs figures, on the other hand, the national unemployment rate actually ticked back up slightly from 5.8% to 5.9%. What this discrepancy represents, however, is in part the 150 thousand people who had previously stopped looking for work altogether but have now begun attempting to reenter the workforce. 

Additionally, the number of voluntary unemployed people - meaning those that chose to quit their job before having secured future employment - increased by more than 20%, which is a sign of economic confidence in its own right.

Further, the number of people who gave up their job search last month fell by over 15% from month to month. In effect, there were more people looking for work last month than in the month prior, but there were also a lot more jobs being added. 

Beyond that, many prospective employees are taking more time and being more deliberate in considering their employment options instead of accepting the first offer that comes their way, all of which seem to be positive indicators that the economic recovery remains on track.

Other data in the latest report that supports continued recovery includes the 2.2% fewer employees who worked remotely over the last month as a result of  COVID-19, as well as the almost 2 million fewer people who were unable to work or had their hours reduced because of the pandemic’s impact on their employer’s business (down from almost 8 million people the previous month). 

All in all, this was a very good jobs report that included (albeit relatively small) upward corrections from jobs numbers for prior months as well. If we are able to maintain the current pace of the economic rebound, the economy would be fully recovered by the end of 2022.

To be clear, full economic recovery in this sense is not just recovering to where we were prior to the pandemic striking, but getting the economy fully back in line with our economic trajectory and the projections for where we expected to be now and in the future if the pandemic had never occurred. That would be a remarkably fast recovery for such an economically impactful event to say the least.

The many caveats about future uncertainties regarding the vaccine and new viral variants all still apply of course, but the latest jobs report was unequivocal good news.

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