The American economy put the brakes on job growth in August. Just 235,000 new jobs were added.
Higher Hopes for More Jobs Undercut by Delta Variant
The Delta variant of COVID-19 took the wind out of job growth sails during August. Rather than continuing on the summer’s course of huge gains, just 235,000 new jobs were added to the nation’s work force.
Economists polled by Bloomberg were anticipating a job gain of 725,000 in August.
According to Nela Richardson, chief economist with ADP,The US economy is facing increasing headwinds as the pandemic wears on and the delta variant creates uncertainty.”
Other Data More Upbeat
The US Labor Department also reported that the unemployment rate fell from 5.4% to 5.2%. Some 3.2M workers remained in the ranks of the “long-term unemployed,” out of work for more than six months. That 3.2M figure was down from July’s 3.4M and the March peak of 4.2M.
Research indicates that long-term unemployment is not only a big negative for workers since they have a harder time finding jobs, it’s also a negative for the economy as a whole. Less workers working means it’s harder for overall employment and the economy to return to pre-pandemic levels.
On the other hand, wage growth (+4.6% m/m) continued on an upward swing, particularly in low-paying jobs. Wage growth in low-wage sectors such as leisure and hospitality was attributed to the absence of hiring in these sectors.
All Agree – Delta Variant is the Culprit
President Biden, Federal Reserve Chairman Powell and a broad swath of economists are all pointing their fingers at the Delta variant.
Biden said, “There’s no question that the Delta variant is why today’s job report isn’t stronger.”
Powell has tied the Fed’s sails to job growth so don’t anticipate any big policy changes here.
Diane Swonk, chief economist with Grant Thornton, said, “Delta is a game-changer. 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.”
Scott Anderson, chief economist with Bank of the West, said, “I think the fingerprints of the Delta variant were all over this (jobs) report.”
Carl Tannenbaum, chief economist with Northern Trust, said, “We got another reminder of how significant the pandemic is in determining progress in our economy. It’s a clear indication of what the outbreak has done.”
Homebase, maker of scheduling software for small businesses, reported a marked downturn in hours worked last month, especially in entertainment and hospitality industries. Homebase CEO John Waldmann said, “We are hearing anecdotally from our customers that absolutely it is a result of COVID. We are seeing similar trends in the data from what we saw last year and January of this year. It would be hard-pressed to say this is not COVID-related.”
Thanks to The New York Times, National Public Radio and Bloomberg.