U.S. Job Growth Slowed in July, Signaling a Loss of Economic Momentum

The ranks of the employed grew by 1.8 million, a drop from the pace of the previous two months, as renewed business closings hampered the recovery.

By guest authors By Nelson D. Schwartz and Gillian Friedman from New York Times

Graphics courtesy by New York Times

The American economy slowed in July as the pace of hiring eased from the robust rate of the previous two months, a victim of waning momentum and the resurgence of the coronavirus in many parts of the country.

Employers added 1.8 million jobs, well below the 4.8 million jump in payrolls in June, the Labor Department reported, after virus-related restrictions caused some businesses to close for a second time. The unemployment rate fell to 10.2 %.

Hours after the report underscored the slowing recovery, talks between administration officials and congressional Democrats on how to pump more aid into the economy were on the verge of collapse. On Friday night, President Trump threatened to bypass Congress and act on his own — though his power to do so was unclear.

Prominent among the unresolved issues were a revival of the government’s USD 600-a-week supplement to unemployment aid, a lifeline for millions of jobless workers until it expired at the end of last month, and a possible extension of an eviction moratorium covering many of the nation’s tenants.

Even with July’s gains, fewer than half of the 22 million jobs lost in March and April have been restored. And economists warn that the rest of the lost ground will be a challenge to regain.

“The easy hiring that was done in May and June has been exhausted,” said Michelle Meyer, head of U.S. economics at Bank of America. “With many companies not running at full capacity, it becomes harder to get that incremental worker back in.”

Over all, the job market reflects the crosswinds buffeting the economy less than 100 days before the presidential election. Retailers continue to file for bankruptcy, while airlines and hotels operate at a small fraction of capacity. Some companies are calling back laid-off employees, even as other employers continue to shed workers.

The longer the crisis goes on, the greater the toll for businesses, especially smaller ones.

“We’re going to start to see a lot of small businesses fall by the wayside, a lot of people who are unemployed become chronically unemployed,” said Kenneth S. Rogoff, a Harvard University economist who has written extensively on financial and economic crises. “We’re in very, very dangerous territory.”

And underscoring the prevalence of what economists term “churn” in the labour market, some jobless Americans have secured work only to find themselves out of a job for a second time.

July’s job growth in the industry followed a jump of 3.4 million in May and June, seasonally adjusted, but employment in the field is still 4.3 million below where it was in February.

The retail industry, another hard-hit sector that has seen numerous bankruptcies in recent months, added 258000 jobs last month.

The pandemic’s toll on jobs in those categories has hit lower-paid workers especially hard, including millions who depend on tips. For big increases in hiring at restaurants and bars, employees may need to wait until indoor dining is again permitted in states like New York — something unlikely to occur until a vaccine is found.

While the survey of households released on Friday, August 7, 2020, counted 16.3 million Americans as unemployed, the Labour Department has reported that over 30 million are receiving some sort of unemployment benefit.

The household survey does not count people as unemployed if they have given up the search for work and are not considered part of the labour force. There are also differences between the Labour Department’s definition of unemployment and state requirements for benefits.