United States – Department of Labor August Jobs Report
According to the United States Department of Labor August Jobs Report, the unemployment rate decreased by 0.5 percentage points from the previous month to 5.4 percent which was below the forecast of 5.7 percent July unemployment rate. The rise can be attributed to more people returning to work which is a sign that the labor market is beginning to recover from the short but deep recession.
The National Bureau of Economic Research (NBER) Business Dating Committee determined that the COVID-19 recession lasted just two months (from February 2020 to April 2020), which would makes it the shortest US recession on record. Despite the fact that the COVID recession is deemed over, it is important to note that the unemployment rate is still well above the pre-pandemic level of 3.9 percent.
The restoration of 978,000 (the highest number jobs in the prior ten months) jobs is significant and beat the employment forecast of 950,000 for the month of July. The three month moving average for July is approximately 832, 000 jobs restored. Nonfarm payroll employment in July was up by 16.7 million since April 2020 but it is still down by 5.7 million compared to its pre-pandemic level in February 2020
The Economic Policy Institute (EPI) states that, the unemployment rate fell for the right reasons in July as more people found work rather than left the labor force. They predict that the current pace of job restoration/growth (as a result of lifting of more COVID-19 restrictions) will lower the unemployment rate to pre-pandemic levels (4 percent or lower) by July 2022 with a full recovery by the end of 2022 – a recovery five times as fast as the recovery following the Great Recession. Other analysts believe that a full recovery can occur as early as February 2022.
Similar to the July Jobs Report, notable job gains occurred in leisure and hospitality with an increase of +380,000 and food services and drinking places (+253,000). The Employment Situation , July2021 report also points to job gains in local government (+221,000). Employment also continued to increase in accommodation (+74,000) and in arts, entertainment, and recreation (+53,000). Despite recent growth, employment in leisure and hospitality is down by 1.7 million, or 10.3 percent, from its level in February 2020.
Industries impacting the IAM show a slight net employment increase from the previous month in in transportation and warehousing (+50,000 for all employees)). Specifically, employment gains where in transit and ground passenger transportation (+19,000), warehousing and storage (+11,000). The good news in this industry is that employment has grown by 534,000 since April 2020, a 92.9 percent recovery from of the jobs lost during the February-April 2020 recession (-575,000).
Employment in manufacturing increased by 27,000 in July, largely in durable goods manufacturing (+20,000). Within durable goods, job gains occurred in machinery (+7,000) and miscellaneous durable goods manufacturing (+6,000). Overall, manufacturing employment is well short (-433,000) of its February 2020 level.
Manufacturing Employment
Month to Month change in Manufacturing Employment
Job gains in durable goods such as fabricated metal products (+4,500 for all employees and +3,800 for production and nonsupervisory workers), and primary metals (+2,500 for all employees and +3,700 for production and nonsupervisory workers) Nonmetallic metals saw increases by 1,800 employees and 300 production and nonsupervisory workers. Other durable goods manufacturing sectors pertinent to the IAM include transportation equipment (-1.500 all employees and +2,000 production and nonsupervisory workers), computer and electronic products (-500 all employees and 2,400 production and nonsupervisory workers), electrical equipment and appliances (+200 all employees, and production and nonsupervisory workers, respectively), transportation equipment (-1,500 all employees and +2,000 production and nonsupervisory workers).
Durable Goods Employment
Month to Month Change in Durable Goods
Non-Durable goods producers gained +7,000 jobs for all employees and for production and nonsupervisory employees, respectively
Month to Month Change in Nondurable Employment
Within the nondurables sectors employment gains/losses were mixed. For instance, employment in food manufacturing increased by 4,000 for all employees and by 3,600 production and nonsupervisory workers. Overall employees in chemical manufacturing saw growth of all workers by +2,600 while the number of production and nonsupervisory workers saw a decrease by -1,800 jobs The number of jobs increased in rubber and plastics (+300, and +1,600 production and nonsupervisory employees) and, Petroleum and coal products employees continue to see a month over month decrease by -.400 employees and-1,600 for production and nonsupervisory workers).
Most economists and analysts believe that the August 2021 Employment Situation report is a good indicator that the economy is heading in the right direction. According to Dean Barker of CEPR, the “Delta variant had not had a major impact on the labor market, at least through the middle of July. If its spread can be contained we will likely continue to see strong job growth, coupled with declines in unemployment”.
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