Jobless rate drops to 8.4% nationally
But pace of hiring slowed in August
WASHINGTON — U.S. unemployment dropped sharply in August from 10.2% to a still-high 8.4%, with about half the 22 million jobs lost to the coronavirus outbreak recovered so far.
Employers added 1.4 million jobs last month, down from 1.7 million in July and the fewest since hiring resumed in May. And an increasingly large share of Americans reported that their jobs are gone for good, according to the Labor Department report.
Altogether, that was seen by economists as evidence that further improvement is going to be sluggish and uneven.
“The fact that employment is settling into a trend of slower, grinding growth is worrisome for the broader recovery,” said Lydia Boussour, an economist at Oxford Economics.
Private companies added just over 1 million jobs in August, with the government providing nearly 350,000 others, including temporary census workers, who accounted for 238,000 new jobs — more than one-sixth of the jobs added overall. The fall in private hiring from July was seen as a sign that employers remain cautious with the virus still out of control.
Other sectors that have been hit hard by the pandemic showed signs of growth. Retailers added 250,000 jobs, led by big gains at warehouse clubs and supercenters, and restaurants, hotels and entertainment firms gained 174,000. Health care added 90,000. But manufacturers, which are enjoying a jump in demand, particularly for cars, added just 29,000 jobs, onetenth of their job growth in June. Construction added just 16,000 despite strong home building.
Unemployment remains higher for women (8.4%), Blacks (13.0%), Asians (10.7%) and Hispanics (10.5%), while it is 7.3% for white people and 8.0% for men.
Richard Moody, chief economist at Regions Financial, noted that about half the private-sector job gains were in three categories: retail; restaurants, hotels and casinos; and health care. All have benefited from the reopening of most states’ economies.
“When the reopening effect wears off, the overall job gains in coming months should be considerably smaller,” he said.
The pace of further gains is likely to hinge on whether the nation improves control of coronavirus infections, as well as an end to the stalemate in Congress over another stimulus package — something that could lose urgency after Friday’s numbers.
POLITICAL UPSHOT
Friday’s figures were the next-to-last employment report before the presidential election Nov. 3. For many voters, the unemployment rate is the most visible measure of the economy.
The drop in the unemployment rate to single digits could give a boost to President Donald Trump, who has often polled better than Democratic opponent Joe Biden on economic issues and is counting on such sentiment to help him win a second term.
Trump tweeted after the report that the jobless rate went below 10% “faster and deeper than thought possible.”
Biden said in a speech later Friday that only wealthy people are feeling the recovery while others are still suffering. “The report reinforced the worst fears and painful truths,” Biden said.
Should unemployment keep dropping rapidly, it could near 7% by early November, said Michael Strain, an economist at the American Enterprise Institute.
“That’s bad, it’s too high, many people will be suffering, but you can see healthy from there,” Strain said. “The question always has been: What’s going to matter more on Election Day — the rate of improvement of the economy or the absolute condition of the economy?”
The drop in unemployment was sharper than most economists expected.
“We’re finally in single-digit territory — that’s a positive,” said Beth Ann Bovino, chief economist at S&P Global Ratings. “This is a good report.”
STIMULUS NEEDED OR NOT?
For Republicans inclined to do less stimulus, the report shows a labor market that as of mid-August was still recovering, weeks after expiration of the weekly $600 unemployment enhancement that many workers had relied on.
After an epic collapse in the spring, when the economy shrank at a roughly 30% annual rate, growth has been rebounding as states have reopened at least parts of their economies. But uncertainty is running high, and many companies are still cutting jobs, with most of the layoffs permanent.
Casino and hotel operator MGM Resorts, slammed by declines in travel and tourism, said last week it is eliminating 18,000 jobs. Coca-Cola, which derives half its sales from stadiums, theaters and other venues that have been largely shut down, is offering buyouts to 4,000 employees. Bed, Bath & Beyond will shed 2,800 jobs.
More than 20% of small businesses are still closed, a figure that has been flat since June, according to Homebase, a provider of time-management software to small companies.
Millions of people have given up looking for work since the outbreak began, many to avoid contracting the coronavirus. That has helped bring down the jobless rate, because the government doesn’t count people as unemployed unless they are actively seeking jobs.
PERMANENT JOB LOSSES
In Friday’s report, less than half of the 13.6 million unemployed said their layoffs were temporary, down from three-quarters in April.
Brandon Stephens, president of Christmas Decor, is struggling with the uncertainty. The business has 300 franchised outlets across the U.S. that are mostly landscape and pest control companies but turn to setting up lights and decorations for Christmas, Halloween and other holidays in the colder months. That switch typically enables the franchisees to save 3,000 jobs.
Stephens said he is seeing a big increase in interest in holiday decorations from consumers. But businesses are much more cautious about committing to big holiday displays.
“The challenge with our business is we don’t know if we’re screwed until the last couple of weeks of the year,” he said.
Roughly 29 million Americans are receiving state unemployment benefits. The Trump administration has set up a program to provide some of the unemployed with an extra $300 a week, but the rules make many ineligible.
One consequence of the crisis is that rising stress and anxiety are evident at therapists’ offices and mental health hot lines around the country.
“Not many days go by where I don’t have a couple where one partner or both are not working or furloughed,” said Todd Creager, a therapist in Southern California who treats mostly middle- to upper-middle-class adults.
Information for this article was contributed by Christopher Rugaber, Steven Peoples, Jill Colvin, Will Weissert and Lindsey Tanner of The Associated Press; by Eli Rosenberg of The Washington Post; and by Reade Pickert, Chris Middleton, Sophie Caronello, Olivia Rockeman, Vince Golle and Tyler Pager of Bloomberg News.