Job creation in August was a huge disappointment, as the economy added just 235,000 jobs, the Labor Department said Friday.
Economists surveyed by Dow Jones had been looking for 720,000 new contracts.
The unemployment rate fell from 5.4% to 5.2%, in line with estimates.
The August total was the worst since January and comes with intense fears of the pandemic and the impact that rising Covid cases could have on what has so far been a mostly solid recovery.
Leisure and hospitality jobs, which had been the main driver of global earnings of 350,000 per month for the past six months, stagnated in August as the industry’s unemployment rate rose to 9.1%.
In contrast, professional and business services made profits with 74,000 new positions. Other winners included transportation and storage (53,000), private education (40,000) and manufacturing and other services, which earned profits of 37,000.
The month saw an increase of about 400,000 in those who said they could not work for pandemic-related reasons, bringing the total to 5.6 million.
Still, the news wasn’t so bad for jobs.
The previous two months saw significant upward revisions, with a total of 1,053 million in July, compared to the original estimate of 943,000, while in June it exceeded 932,000 to 962,000. Over the two months, revisions added 134,000 to the initial counts.
In addition, wages continued to accelerate, rising by 4.3% year-on-year and 0.6% month-on-month. Estimates had been 4% and 0.3% respectively.
Weekly employment applications have dropped to the lowest levels since the early days of the pandemic in March 2020, but a large labor gap remains.
It’s not that there aren’t enough jobs – the placement firm, in fact, estimates there are about 10.5 million openings, an easy record for the U.S. job market.
Federal Reserve officials are closely monitoring jobs to find clues as to whether they can begin easing some of the political aid they have been providing since the pandemic began.
In recent weeks, central bank leaders have expressed optimism about the labor landscape, but said they should continue to have strength before changing course. At stake right now is the Fed’s massive monthly bond-buying program, which could begin to shrink before the end of the year.
However, if job data becomes softer, this could cause Fed officials to wait until 2022 before reducing pressure.
This is breaking news. Please check here again for updates.
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