The US economy added 943,000 jobs in July
New York (CNN Business)The US economy added 943,000 jobs in July and the unemployment rate fell to 5.4% — a new low of the pandemic era — the Bureau of Labor Statistics reported Friday.
It was the biggest job gain since August last year, when more than 1 million positions were added back, and more than the 870,000 economists had expected.
The June jobs gains was revised up as well, to 938,000 positions added, showing the recovery’s strong pace over the summer.
“I have yet to find a blemish in this jobs report,” wrote Harvard economist Jason Furman on Twitter (TWTR).
Since May 2020, America has added back 16.7 million jobs. But it’s still 5.7 million short of its pre-pandemic level.
President Joe Biden on Friday touted the success of his administration’s economic policies but tempered his message saying “we doubtlessly will have ups and downs along the way as we continue to battle the Delta surge of Covid.”
Still a long way to go
The hospitality and leisure industries — decimated by lockdown measures last year — were once again the biggest contributors of job gains, accounting for more than a third of the total. Some 253,000 jobs were added in restaurants and bars alone last month.
While the rampant growth is great news, the industry is still down 1.7 million jobs since February last year.
Hiring also picked up in eduction, according to the seasonally adjusted data. But the labor bureau warned that because hiring and layoffs in education were so distorted by the pandemic, the adjusted data might overstate the hiring in July.
Average hourly earnings rose for the fourth month in a row, adding 11 cents to $30.54, as the high demand for workers is pressuring companies to pay more to attract staff.
The jobless rate fell to its lowest level since the pandemic started, declining across nearly all demographic groups counted in the survey.
The unemployment rate for Black teenagers jumped by four percentage points to 13.3%.
The labor force participation rate inched up to 61.7%, while the employment-population ratio increased to 58.4%. Both measures are still below their February 2020 level.
“The stagnant participation rate confirms that there are millions of potential workers who are still outside the labor force, not currently looking for work and therefore not counted among the unemployed,” said Cailin Birch, global economist at The Economist Intelligence Unit.
That said, nearly a million people found work in July, and that’s a good sign for both the jobs recovery and consumer spending, which the US economy needs to grow, Birch said.
The pandemic recovery has been defined by a mismatch between businesses’ demand for staff and workers’ ability and willingness to go back out there amid childcare issues, virus fears and generous benefits.
Fed implication and Delta risk
For the Federal Reserve, which has been touting that it needs to see more improvements in the labor market before adjusting its policies, the July jobs numbers are just what the doctor ordered.
Even though the central bank doesn’t seem to be in a rush to end its easy money policies, the sustained summer job growth is an important piece of the puzzle. In June, the Fed’s consensus projections showed an interest rate hike in 2023, while it is widely expected it will start to taper its monthly asset purchases before then.
Correspondingly, the US stock market was mixed Friday as investors digested the good economic news along with the possible policy implications.
On top of that, there’s a new hurdle in the path of the labor recovery: The Covid-19 Delta variant has brought back restrictions on public life in some places in the nation, and the Centers for Disease Control and Prevention updated its mask guidance for those who have been vaccinated.
So far, the increased virus spread from Delta has not weighed on the jobs data much, but that could change in the next reports.
–CNN’s Betsy Klein and Kate Sullivan contributed to this report.
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