“Disappointing” seems to be the headline word of the day in reports of the August jobs report. The Bureau of Labor Statistics reports,
Total nonfarm payroll employment rose by 235,000 in August, and the unemployment rate
declined by 0.2 percentage point to 5.2 percent, the U.S. Bureau of Labor Statistics
reported today. So far this year, monthly job growth has averaged 586,000. In August,
notable job gains occurred in professional and business services, transportation and
warehousing, private education, manufacturing, and other services. Employment in retail
trade declined over the month.
The consensus forecast had been for about 728,000 new jobs.
The Associated Press reporting puts the month in context and offers a positive spin.
America’s employers added just 235,000 jobs in August, a surprisingly weak gain after two months of robust hiring at a time when the delta variant’s spread has discouraged some people from flying, shopping and eating out.
The August job gains the government reported Friday fell far short of the big gains in June and July of roughly 1 million a month. Those increases were revised higher by a combined 134,000. The gains in June and July followed widespread vaccinations that allowed the economy to fully reopen from pandemic restrictions.
Still, the number of job openings remains at record levels, and hiring is expected to stay solid in the coming months. And even though hiring was relatively tepid in August, the unemployment rate dropped to 5.2% from 5.4% in July.
Still, the slowdown is cause for concern. As we have written, the ADP employment report showed private employment coming in below expectations, the NFIB survey found that half of small businesses have unfilled positions, and while last week’s unemployment claims filings were down, labor shortages remain a major problem and threat to the recovery.
The AP report notes,
Hiring in a category that includes restaurants, bars and hotels, for example, sank to zero after those sectors had added roughly 400,000 jobs in both June and July. With COVID cases having spiked this summer, Americans have been buying fewer plane tickets and reducing hotel stays. Restaurant dining, after having fully recovered in late June, has declined to about 10% below pre-pandemic levels.
The slowdowns in travel and dining out meant that employers had less reason to add jobs in those areas. And many job hunters were likely reluctant to take public-facing jobs as the delta variant has spread.
In related news, the AP reports that service sector employment slowed in August.
The Institute for Supply Management reported Friday that its monthly survey of service industries decreased to a reading of 61.7 in August after hitting a record high of 64.1 in July. The July figure was the fastest pace since this data series began in 2008.
CNBC reports a key factor.
It’s not that there aren’t enough jobs out there: Placement firm Indeed estimates that there are about 10.5 million openings now, easily a record for the U.S. labor market.
With the pandemic-related federal additional UI benefits programs set to expire next week, some anticipate more unemployed workers will re-enter the job market. But that’s by no means certain.
Economists disagree over the effects of federal unemployment benefits on the labor shortage. According to a recent analysis by The Wall Street Journal, job growth in states that ended federal unemployment benefits earlier this year hasn’t been significantly better than in states where the pandemic benefit were still being offered.
Whether this is a one-month pause or the beginning of a longer-term trend will largely depend on getting control of the pandemic surge.