Hiring surge in July
Some worry that resurgent virus could trigger another round of shutdowns
U.S. employers added 943K jobs, dropping unemployment rate to 5.4%.
WASHINGTON — U.S employers added 943,000 jobs in July and drove the unemployment rate down to 5.4% in another sign the economy is bouncing back with surprising vigor from COVID-19. But there is growing fear the fast-spreading delta variant will set back the recovery.
The worry is that the resurgent virus could discourage people from going out and spending and trigger another round of shutdowns or other restrictions.
“That is a definite downside risk,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “The risk is from a more cautious consumer, if they don’t want to engage in outside activities. ... You’re also hearing about big companies that are delaying a return to work. That might be something that slows things down.”
The Labor Department collected its data for the report in mid-july before the Centers for Disease Control and Prevention last week reversed course and recommended that even vaccinated people resume wearing masks indoors in places where the variant is pushing infections up.
Still, the July numbers looked good. They exceeded economists’ forecast of more than 860,000 new jobs. Encouraged by their prospects, 261,000 Americans returned to the job market in July. And the unemployment rate fell from 5.9% in June.
Moreover, the report found that as customers come back and businesses scramble to find workers, they are raising wages: Average hourly earnings were up 4% last month from a year earlier.
The Labor Department also revised its jobs numbers for May and June, adding 119,000 jobs.
The economy lost over 22 million jobs in March and April 2020 in a practically overnight recession as the coronavirus forced businesses to shut down and people to stay home. Since then, the U.S. has recovered nearly 17 million jobs, meaning it is still almost 6 million short.
“If the pace of hiring over the last three months continues, all jobs lost due to the pandemic would be regained in seven months,” Leslie Preston, senior economist at TD Economics, wrote in a research report. “However, the pace is likely to cool a bit and the risk of the delta variant looms.”
The unexpectedly strong numbers come at a critical moment for President Joe Biden’s agenda, with the Senate set to take up a $1 trillion infrastructure bill this weekend before moving on to a more than $3 trillion expansion of the social safety net pushed by the Democrats.
Biden said the jobs report validates his efforts to stabilize the economy and slow the spread of the virus, and he encouraged lawmakers to pass the rest of his agenda.
The U.S. is seeing an average of more than 98,000 new COVID-19 cases per day, up from fewer than 12,000 a day in late June — though still well below the peak of 250,000 reached in January. The vast majority of new cases are among people who have not gotten vaccinated.
Farooqi said she is optimistic the job rebound can continue despite the variant, but she is holding off on her forecast for August because “there are a lot of unknowns right now.”