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U.S. Jobs Soar by 943,000 in July; Unemployment Rate Falls to 5.4 Percent

  • U.S. economy adds 943,000 jobs in July, with the leisure and hospitality sector again accounting for the largest share of new employment
  • Unemployment falls half a point to 5.4 million
  • Labor market remains below pre-pandemic levels, with recent factors such as early retirements and the spread of the COVID-19 Delta variant raising concerns

Summary by Dirk Langeveld

The U.S. economy posted a second strong month in employment gains in July, adding 943,000 jobs. However, the labor market remains uncertain amid increasing COVID-19 cases and other factors.

July’s tally follows upwardly revised gains of 938,000 in June and 614,000 in May. The economy has recovered 16.7 million jobs since April 2020, but is still 5.7 million below pre-pandemic levels in February 2020.

The unemployment rate fell half a point to 5.4 percent, with 8.7 million people categorized as unemployed. These figures remained above the February 2020 levels of 5.7 million out of work and a 3.5 percent unemployment rate.

  • The leisure and hospitality sector continued to lead the jobs recovery, adding 380,000 positions in July including 253,000 in food service and drinking establishments; the sector is still down 1.7 million jobs (10.3 percent) from pre-pandemic levels
  • Local government education added 221,000 jobs but remained 205,000 positions lower than in February 2020
  • The transportation and warehousing sector, which added 50,000 jobs in July, is up 534,000 positions since April 2020 but is still down 575,000 jobs compared to pre-pandemic levels
  • Other significant jobs gains occurred in professional and business services (60,000), other services (39,000), health care (37,000), manufacturing (27,000), and information (24,000)
  • Retail jobs fell by 6,000 following strong gains in previous months, while construction jobs were flat
  • Average hourly earnings increased 11 cents to $30.54, while the average work week was unchanged at 34.8 hours
  • The number of long-term unemployed fell 560,000 to 3.4 million, but still up considerably from 1.1 million in February 2020
  • The labor force participation rate remained relatively unchanged at 61.7 percent
  • Uncertainty remains in the labor market due to factors such as a continuing low labor participation rate and an acceleration in early retirements; the data for July also does not reflect the recent spread of the COVID-19 Delta variant, which is causing renewed concerns about tightened business restrictions or diminished consumer demand
  • Economists say it is still unclear what effect the early withdrawal from federal unemployment supplements had on the labor market, but that data for August should give a clearer picture

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