By guest author Nelson D. Schwartz from the New York Times. Nelson D. Schwartz has covered economics since 2012. Previously, he wrote about Wall Street and banking, and also served as European economic correspondent in Paris. He joined The Times in 2007 as a feature writer for the Sunday Business section. Ben Casselman contributed reporting.
August added a disappointing number of jobs.
The American economy slowed abruptly last month, adding 235000 jobs, a sharp drop from the huge gains recorded earlier in the summer and an indication that the Delta variant of the coronavirus is putting a damper on hiring.
The Labour Department report on Friday (September 3, 2021) follows a sharp increase in coronavirus cases and deaths that has undermined hopes that restrictions on daily activities were nearing an end.
The unemployment rate was 5.2 %, compared with 5.4 % in July. Economists polled by Bloomberg has been looking for gain of 725,000 jobs.
The August showing would have been respectable in prepandemic times. But after gains of 962,000 in June and 1.05 million in July — and with more than eight million people unemployed — it was a sharp deceleration.
“Delta is a game-changer,” said Diane Swonk, chief economist at Grant Thornton, an accounting firm in Chicago. “It’s not that people are laying off workers in reaction to Delta but people are pulling back on travel and tourism and going out to eat and that has consequences.”
Restaurant reservations on OpenTable were close to normal levels earlier in the summer, but are now 10 % below where they were before the pandemic. There has also been a sharp decline in hours worked at restaurants and entertainment venues, according to data from Homebase, which provides time-management software to small businesses.
Leisure and hospitality employment in August was unchanged, according to the Labour Department, after strong gains in previous months. Retail jobs declined by 29000.
The report also showed the first increase since December in the number of people working from home.
Moreover, the Labour Department data was collected in the second week of August, so it may not reflect the full extent of the Delta spread or the impact of Hurricanes Henri and Ida in the second half of the month.
Although many experts expect economic growth to dip in the current quarter from the annualized rate of 6.5 % in the spring, the economy is expected to remain in expansion mode for the rest of the year.
Gross domestic product has regained the ground lost in the pandemic. The housing market is robust, and Wall Street has been notching records as corporate results remain strong.
Manufacturing has been more muted, held back by supply chain disruptions and shortages of critical parts like semiconductors for automakers.
For Americans who are out of work, robust hiring is essential if unemployment is to get back to the 3.5 % rate that prevailed before the pandemic. The plight of the jobless is compounded by the expiration of federally funded unemployment benefits after this week, which will affect an estimated 7.5 million people.