Today’s job report from the U.S. Bureau of Labor Statistics shows a strong economic resurgence in July.
Total nonfarm payroll employment rose by 943,000 in July, and the unemployment rate
declined by 0.5 percentage point to 5.4 percent, the U.S. Bureau of Labor Statistics
reported today. Notable job gains occurred in leisure and hospitality, in local government
education, and in professional and business services.
The unemployment rate fell for across key worker groups.
Among the major worker groups, the unemployment rates declined in July for adult men
(5.4 percent), adult women (5.0 percent), Whites (4.8 percent), Blacks (8.2 percent), and
Hispanics (6.6 percent). The jobless rates for teenagers (9.6 percent) and Asians (5.3
percent) showed little change over the month.
And the number of long-term unemployed also dropped, though it remains much higher than the pre-pandemic level.
The number of long-term unemployed (those jobless for 27 weeks or more) decreased by
560,000 in July to 3.4 million but is 2.3 million higher than in February 2020. These
long-term unemployed accounted for 39.3 percent of the total unemployed in July. The
number of persons jobless less than 5 weeks increased by 276,000 to 2.3 million.
Wages also improved by about 4%, the the BLS notes wide variations.
In July, average hourly earnings for all employees on private nonfarm payrolls increased
by 11 cents to $30.54, following increases in the prior 3 months. Average hourly earnings
for private-sector production and nonsupervisory employees also rose by 11 cents in July
to $25.83. The data for recent months suggest that the rising demand for labor associated
with the recovery from the pandemic may have put upward pressure on wages. However,
because average hourly earnings vary widely across industries, the large employment
fluctuations since February 2020 complicate the analysis of recent trends in average
hourly earnings.
Analysts call the report good news. The Wall Street Journal writes,
A strengthening U.S. labor market added cushion to the economic recovery in July ahead of the Delta variant threat, with employers creating jobs at the best pace in nearly a year and the unemployment rate falling sharply…
Friday’s report showed that the U.S. economy is facing any threat posed by the Delta variant with a strong tailwind. The economy has recovered rapidly this year with availability of vaccines, business reopenings, pent-up consumer demand and aid flowing from multiple rounds of government stimulus legislation. Falling unemployment and rising wages further reinforce underlying strength, and so far there is little evidence to suggest that the recent case surge is significantly slowing the U.S. recovery.
The WSJ points out the surveys for the jobs report were conducted in mid-July, before many employers and public officials re-imposed some workplace and behavioral restrictions in response to the Delta variant. Still,
“This not only was a strong jobs report by nearly every measure, it also signals more good things to come,” said Robert Frick, corporate economist at Navy Federal Credit Union, adding that the report reflects little about the rising cases tied to the Delta variant. “The effect this will have on jobs, especially in the leisure and hospitality industries, is unknown, though so far it appears to be minimal.”
And,
“We haven’t seen too many strict quarantine measures—masks aren’t closures” in terms of economic impact, said Beth Ann Bovino, U.S. chief economist at S&P Global. The U.S. faces little risk of falling back into recession, and job growth should continue this fall, she said. But Ms. Bovino said the Delta variant could make her forecast for employers to add 600,000 jobs a month through the end of the year too optimistic.
As we noted yesterday in our comments on unemployment claims filings, heading into August the recovery faces three headwinds: labor shortages, supply-chain challenges, and the Delta variant. Of the three, the biggest concern appears to be virus.
The Associated Press also reports on the July numbers and notes the pandemic effect.
The worry is that the resurgent virus could discourage people from going out and spending and trigger another round of shutdowns or other restrictions.
“That is a definite downside risk,’’ said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “The risk is from a more cautious consumer, if they don’t want to engage in outside activities. … You’re also hearing about big companies that are delaying a return to work. That might be something that slows things down.’
In all a good report.
