In last month’s impressive report, nearly 1 million new jobs were added, capping off a period of strong economic growth throughout the spring and summer months. As such, it was perhaps inevitable that the positive momentum toward recovery would eventually slow.
Despite adding 235,000 thousand new jobs and reducing the unemployment rate from 5.4% to 5.2%, the headline from the Bureau of Labor Statistics is that the economic recovery rate dipped to levels that were far below most economic forecasts.
In normal times, the figures represented in this jobs report would be welcome news, but because pandemic losses have yet to be recovered this report fell short of expectations.
For example, the number of people who permanently lost their job (and do not expect that job to return when the economy normalizes) was reduced by nearly 450,000 people, falling from almost 3 million people to about 2.5 million. Because of the pandemic, however, these numbers are less impressive given that there are still 1.2 million more permanently lost jobs than there were before the pandemic.
Similarly, the number of long-term unemployed persons (or those who have been unemployed for at least 27 consecutive weeks while continuing to look for work) declined by almost 250,000. Again, context is critical here; the number of long-term unemployed represents more than 2 million more workers than it did in February 2020, or before COVID-19 began to significantly impact the U.S. economy and labor market.
More concerning than the metrics noted above–which are moving in the right direction–are the metrics that essentially went unchanged and the metrics that experienced backsliding in the wrong direction. A prime example of the latter is the approximate 400,000 additional people who were unable to work at least part time over the past month, raising that figure from roughly 5.2 million to about 5.6 million workers.
On an industry level, business and professional services had the biggest gains, with almost 75,000 thousand new jobs or an almost 14% reduction from the total number of jobs in this category. Further, among the approximately 462,000 jobs still needed to meet pre-pandemic levels, more than half of those jobs were temporary help services.
There were a number of other industries with notable gains, including transportation and manufacturing that added almost 40,000 jobs last month. Perhaps most interesting, however, is the leisure and hospitality industry, which saw its jobs numbers go unchanged despite the fact that there was 10% less restaurant dining than the month prior.
Mployer Advisor’s Take
The pace of economic recovery experienced fairly broad gains through the spring and summer months, but the pendulum will always swing back.
The main question that the latest report poses is: Does this month represent a temporary blip, or is it indicative of a long-term shift?
While there are differing opinions among experts about how the economy will respond heading into the fall, there is consensus that the pandemic–specifically the Delta variant surge–will continue to impact economic trends going forward. In any case, next month’s report may be telling about what we should expect to see in the coming months.