US job growth slows as employers hire 1.8 million workers in July

The United States economy added 1.8 million jobs in July, pushing the unemployment rate down to 10.2 percent, the US Department of Labor reported on Friday.

While the report was better than many economists were anticipating and the spectre of jobs creation moving in the right direction is undoubtedly good news for the world’s largest economy, the July headline number marks a dramatic slowdown from the 4.8 million jobs added in June.

The deceleration in nonfarm payrolls signals that a spike in coronavirus infections that saw nearly two-thirds of the country pause or roll back the easing of lockdown restrictions last month prompted employers to lay off workers and to hold off on hiring staff.

But while millions of people lost jobs, millions of others gained them, with the balance moving in favour of people going back to work.

“The 1,763,000 increase in non-farm payrolls in July confirms that the resurgence in new virus cases caused the economic recovery to slow, but also underlines that it has not yet gone into reverse,” Andrew Hunter, senior US economist at Capital Economics, wrote in a note to clients.

The number of unemployed workers last month fell by 1.4 million to 16.3 million. But the labour market still has a very long way to go to regain its pre-pandemic strength.

The economy had nearly 13 million fewer jobs in July than February – when the country officially entered recession right before COVID-19 containment measures shut down businesses, throwing tens of millions of Americans out of work.

Whether the labour market is shaking off the uncertainty sown by surging COVID-19 infections this summer is tough to tell, especially with political wrangling over a new round of federal virus relief aid obscuring the outlook even more.

After two straight weeks of rises, weekly jobless claims filed with states – one of the most timely snapshots of labour market health – fell by nearly a quarter of a million in the week ending August 1, the Bureau of Labor Statistics reported on Thursday.

While that number suggests that layoffs across the nation are ebbing, some economists warned that the expiration of the federal $600 weekly top-up to state unemployment benefits at the end of July could have discouraged some workers from filing claims.

Republicans and Democrats in Congress are still hammering out a new virus relief package, and they are at loggerheads over the size and scope of the federal supplement to unemployment cheques.

Democrats want to extend the $600 federal weekly supplement through January, while Republicans want to slash the combined state and federal benefit to 70 percent of workers’ previous wages, with the federal top-up capped at $500 a week.

A deeper dive into the numbers

A deeper dive into the July jobs report reveals a labour market recovery marked by sharp racial, ethnic and gender disparities – imbalances dating back decades which are now being exacerbated by the pandemic.

The white unemployment rate fell to 9.2 percent in July, compared with 14.6 percent for African Americans and 12.9 percent for Latinos.

Women workers are also getting the short-end of this recovery, with the unemployment rate for adult women still stuck in double digits at 10.5 percent, compared with 9.4 percent for adult men.

About one-third of the jobs gained in July were created in the leisure and hospitality sector, with employment in food services and drinking places rising by just more than half a million. Despite three months of gains, employment in the sector is down by 2.6 million since February.

Retail added about a quarter million jobs in July, but employment in the sector is still off by nearly a million since February.

Manufacturing gained 26,000 jobs in July, but employment in the sector is still 740,00 lower than in February.