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The numbers: The labor market suffered a setback in July as the U.S. only added 1.76 million jobs, reflecting a sharp slowdown since the late spring and underscoring the fragile nature of an economic recovery with the coronavirus still running rampant.
The official unemployment rate fell for the third month in a row to 10.2% from 11.1%, the government said Friday.
The number of new jobs regained last month amounted to about one-third of the revised 4.79 million gain in June. The coronavirus has surged in a number of states in the past few months, including California, Texas and Florida, though cases now appear to be receding again.
The mild improvement in hiring was a bit weaker than it appeared. The government’s process of seasonal adjustments showed a somewhat larger but likely exaggerated increase in school employment.
Stripping out government, private-sector jobs rose by 1.46 million last month, the Labor Department said Friday.
The U.S. stock market trimmed its losses in premarket trades after the report. The increase in new jobs was slightly above the 1.68 million MarketWatch forecast.
The slowdown in hiring — hardly unexpected — will make it harder for the economy to recover quickly.
The U.S. shed more than 22 million jobs during the height of the pandemic. So far it’s only restored about 9.3 million, leaving more than half of the Americans who lost their jobs in the lurch. And an even larger 31 million people were collecting unemployment benefits in mid-July based on the most recent numbers available.
Read: Economy suffers titanic 32.9% plunge in 2nd quarter, points to drawn-out recovery
Also:‘A massive welfare economy’ – federal aid prevents even steeper GDP collapse
What happened: Restaurants and retailers added the most jobs in July, but at a slower pace compared to the prior two months. Restaurants rehired 502,000 workers and retailed raised employment by 258,000.
Restaurants and retailers have been at the epicenter of the pandemic. They suffered the biggest decline in employment early on, shedding more than 8 million jobs combined.
They’ve brought back about half of those jobs since then, but progress from here on out is likely to be erratic after the latest coronavirus outbreak spurred states to tighten restrictions on business openings and indoor activities.
The number of peopled employed by government showed an 301,000 increase, but the outsized gained was partly a statistical sleight of hand.
Many school workers such as bus drivers and cafeteria workers who would normally be laid off in July were sent home after schools closed early in the spring. The government’s normally ho-hum process of seasonal adjustments made it look like hiring rose simply because those layoffs did not take place in July as usual.
The federal government also hired more Census workers.
Health-care providers, meanwhile, boosted payrolls by 126,000. Manufacturers added 26,000 jobs. And construction companies took on 20,000 workers to keep pace with rising demand for houses.
Home builders have been a surprise beneficiary of the crisis. Mortgage rates have fallen to modern record lows and many people are fleeing crowded cities for more space in the suburbs and country.
The energy sector, on the other hand, has also been hard hit by the pandemic. People are driving and flying far less, reducing demand for oil and gas. Employment fell by 7,000.
Average hourly wages edged up slightly, rising 7 cents to $29.39 an hour. Yet massive swings in employment have made the normally slow-changing pay data less useful as a gauge of how much wages going up.
Although the official jobless rate fell again, it’s quite likely the true level of unemployment is higher.
A broader measure of unemployment known as the U6 suggests the “real” rate was 16.5% in July, a bit lower from 18% in the prior month. The U6 rate includes workers who can only find part-time jobs and those who’ve become too discouraged to look for jobs because so few are available.
The government revised the June employment gain down slightly to 4.79 million. The increase in May was raised a touch to 2.73 million.
Big picture: The resurgence in coronavirus cases partly sidetracked a recovery that gained steam in May and early June and indicates a rocky path ahead for the economy. The U.S. simply can’t return to normal while the coronavirus is still a big threat and millions of people can’t go back to work.
The longer the crisis goes on, economists say, the more likely that temporary job losses become permanent — and the longer it will take for the U.S. to recover. Some say the process could take years absent a vaccine or other effective treatments.
See:Marketwatch’s Coronavirus Economic Recovery Tracker
What they are saying? The economic outlook deteriorated markedly from the middle to the end of July as consumers became less willing to spend money, and businesses grew increasingly uncertain about the demand for their goods,” said economist John Leer at Morning Consult. “As a result, the current employment situation is likely weaker than these numbers indicate.”
Read:Consumers hold the key to an economic recovery and right now they’re very anxious
Market reaction: The Dow Jones Industrial Average DJIA, +0.68% and S&P 500 SPX, +0.64% were set to open lower in Friday trades.
