NEW YORK: Even in the July jobs report, which was almost universally praised as a good one, pockets of weakness and worry still loom over the celebration.
The numbers in the report were certainly strong, with employers adding 943,000 more jobs than they cut to their payrolls, a better hiring performance than economists expected. The unemployment rate also fell in another encouraging sign, falling by half a percentage point from June to 5.4%. And many economists expect further improvement.
Unemployment rates fell for many groups across the country, but not for all the right reasons. For example, among black workers, the decline may be entirely due to people dropping out of the workforce, not more people getting jobs.
There is also growing concern that the sheer force found in July’s jobs report could prove fleeting. The rapidly spreading delta version of the coronavirus is causing people to wear masks and feel more anxious again, threatening reforms.
It’s a good jobs report, but the delta version is casting a significant shadow on the outlook at the moment, said Russell Price, chief economist at Ameriprise.
Here are five excerpts from July’s jobs report:
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Already out of date?
The strong figures in Friday’s report come from surveys conducted in the second week of July. That means they don’t fully reflect the ramp-up in concerns about the Delta variant. For example, the Centers for Disease Control had not changed its guidelines for masks until July 27. It asked all Americans to wear masks again indoors in areas of high or substantial transmission, regardless of whether they have been vaccinated.
If case numbers continue to worsen, customers may shy away from returning to stores, restaurants and other businesses. This can affect the number of jobs being offered. Deteriorating trends may discourage potential workers from filling those job openings.
Beth N. Bovino, chief US economist at S&P Global Ratings, pointed to a recent LinkedIn report that said hiring was down 5.8% compared to June. The report looked at how many users added new employers to their profiles throughout the month, and Bovino said it could reflect some of the delta effect that the government jobs report may have missed.
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Broad, but not identical, benefits
A variety of Americans returned to work in July. For example, the unemployment rate for Latinos fell from 7.4% in June to 6.6%. For Asian Americans, it fell from 5.8% to 5.3%, and for white workers, it fell from 5.2% to 4.8%. The rate also dropped from 9.2% to 8.2% for black Americans.
But reform did not work for black workers because many of them found jobs. Employment numbers for the group were almost unchanged from June. Instead, much of it was due to black people being left out of the workforce. Last month, 60.8% of all black Americans were in the labor force, down from 61.6% in June.
Ameriprises Price said it was surprised by the varying trends and couldn’t immediately think of an explanation.
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Less support from the Fed?
Even with pockets of worry, the July jobs report was strong enough that investors saw it as another sign that the time may be near for the Federal Reserve to withdraw its support for the economy.
The Fed is keeping short-term interest rates at a record low of nearly zero to juice up the economy after it plunged into recession due to the coronavirus. The central bank is also buying $120 billion worth of bonds every month to help keep long-term rates low. The move has made it cheaper to borrow money, and has resulted in soaring prices in the housing and stock markets.
With July’s strong job numbers, investors are preparing for the coming months for the Federal Reserve to say it will slow its bond purchases. This will be the first step before raising interest rates. Such expectations helped send the yield on the 10-year Treasury to 1.28%, up from 1.21% late Thursday. This is a significant step forward for the bond market.
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Bounceback, but not full recovery
The strongest gains in jobs last month came from sectors hardest hit by the pandemic: the leisure and hospitality industries.
They accounted for 40% of the country’s job growth last month, with particularly strong gains for food services and drinking spots as people flocked back to restaurants and bars.
Even with gains, however, jobs in the leisure and hospitality industries remain 10% below where they were in February 2020, before the pandemic crashed the economy.
Higher wages are also helping to attract workers to industries that have some of the lowest paying jobs. According to preliminary data, leisure and hospitality workers earned an average of $18.55 an hour last month. This is up 0.9% from June. Among all private sector workers, median hourly earnings rose 0.4% to $30.54.
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more people at work
Last month not only were more people working, but more people were at work.
Only 13.2% of employed people teleworked in July because of the pandemic. This is down from June’s 14.4%. In May 2020, one in three employees, or 35.4%, were teleworking.
The numbers count all those who worked from home in the last four weeks especially because of the pandemic. Asian American workers were most likely to account for 30.1% of their total workforce. This compares to 12.3% for white workers, 10.8% for black workers, and 8% for Latino workers.
Of course, the delta version can escalate things here as well. Many large employers have already pushed back their office-to-off dates due to concerns over the Delta variant. For example, Amazon extended its date for tech and corporate employees from September to January.
Disclaimer: This post has been self-published from the agency feed without modification and has not been reviewed by an editor
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