It's off to work we go ...
Defying a resurgence of Covid-19 cases across the southern and western United States, Americans continued to return to work in July at an impressive pace. Nonfarm payrolls increased by 1.763 million in July, exceeding expectations of a gain of 1.48 million but at a slower pace than the 4.8 million jobs added in June. As a result, the unemployment rate fell to 10.2%.
Since peaking in April, the unemployment rate has now fallen by 4.5 percentage points as the economy has added back nearly 9.3 million jobs, helping to propel a faster-than-expected recovery from the lockdown lows. Still, overall employment remains roughly 13 million below pre-pandemic levels.
By industry, leisure and hospitality, which has represented the epicenter of the pandemic from an economic perspective, continues to drive the recovery in jobs, adding 592,000 jobs last month. By contrast, manufacturing only added 26,000 jobs in July, well below expectations for a gain of 255,000 jobs. The surprise is compounded by manufacturing data, including the ISM Manufacturing Index, which have consistently beaten expectations in recent weeks.
On a forward basis, the focus will be on the labor market’s ability to maintain its current momentum. Signs the pandemic may be plateauing bode well for the outlook, as does the potential for another round of fiscal support. It will be interesting to see if today’s strong jobs report reduces some of the urgency as the debate over a fifth fiscal support package continues in Washington.
For now, the bottom line is the labor market is continuing to heal, helping drive a robust recovery from the Stay-At-Home Recession.