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The numbers: The U.S. regained 1.4 million jobs in August and the unemployment rate sank to 8.4%, suggesting an economic recovery is still plowing ahead even if the pace of growth has slowed since the start of the summer.
The increase in hiring last month exceeded Wall Street’s forecast. Economists polled by MarketWatch had forecast a 1.2 million gain. U.S. stocks rose in premarket trading.
The employment picture was a bit softer after stripping out the hiring of 238,000 temporary Census workers and those who work in public education. Private-sector hiring rose by 1 million, down from 1.48 million in July, the government said Friday.
The most positive news was a big drop in the official unemployment rate to 8.4% from 10.2%, marking the fourth straight decline. A separate survey of households showed a much larger number of people returning to work and a sharp decline in the people who were unemployed.
Unemployment is about one-third lower now compared to the pandemic peak, but the current rate probably exaggerates the improvement in the labor market. Several million Americans have dropped out of the labor force since the beginning of the pandemic and some 29 million were reportedly still receiving jobless benefits as of the middle of last month.
Read: Initial jobless claims fall to new pandemic low of 881,000 — but there’s a big catch
Although the economy is still on the mend, the end of summer has also spawned fresh problems.
Many parents lack day-care options and are grappling with how to care for their school-age children learning virtually at home while they work at the same time. A new Federal Reserve study found the start of the school year has made it harder for businesses that are hiring to attract workers.
Read:Economy softened in August, Fed says, as some temporary layoffs turn permanent
A stalemate in Congress over another financial-rescue package has also left many unemployed Americans in a more precarious financial position. A $600 federal unemployment stipend expired at the end of July and small businesses can no longer apply for loans to help cover payroll costs.
Read: Did the expired $600 federal jobless benefit keep people from going back to work?
A spate of companies such as American Airlines AAL, +0.98%, United UAL, +1.38% and MGM Resorts MGM, -2.74%, meanwhile, have announced new furloughs and layoffs with their businesses still in a deep slump.
They warn job losses could become permanent without more government help or a faster rebound in the economy.
The U.S. shed more than 22 million jobs during the worst of the pandemic. So far it’s restored about 10.7 million jobs, leaving about half of the people who were laid off still out of work.
Big picture: The U.S. economy have proven quite resilient, expanding again in August despite the summer viral outbreak and the end of massive federal benefits. A variety of reports such as restaurant reservations, retail spending and in-store shopping also suggest an increase in consumer spending and steady if slower growth in the economy.
What’s less clear is whether the economy can sustain its foward progress. Unemployment remains sky-high, the threat of a fresh wave of layoffs is rising and the coronavirus is still very much a threat. A divided political leadership in Washington and one of the most divisive presidential elections in history is unlikely to help, either.
See:Marketwatch’s Coronavirus Economic Recovery Tracker
What they are saying? “There are certain industries that are essentially stuck until the virus recedes further, such as air travel, sporting event and concert admissions,” said chief economist Stephen Stanley before the jobs report was published. “But for most of the economy, the return to normal is occurring inch by inch and day by day, with plenty more to come.”
Market reaction: The Dow Jones Industrial Average DJIA, -2.77% and S&P 500 SPX, -3.51% were set to open higher in Friday trades.
