Total nonfarm payroll employment rose by 235,000 in August, following increases of 1.1 million in July and 962,000 in June, according to the U.S. Bureau of Labor Statistics’ latest employment report.
The unemployment rate declined by 0.2 percentage points to 5.2% last month, while the number of unemployed persons edged down to 8.4 million, following a large decrease in July. Both measures are down considerably from their highs at the end of the February to April 2020 recession. However, they remain above their levels prior to the COVID-19 pandemic—3.5% and 5.7 million, respectively.
“The August jobs report is clear proof of what we’ve known since last March—the state of the economy is dependent on the state of the virus,” says Ali Wolf, chief economist at Zonda. “As consumers and businesses reacted to the spread of the Delta variant, the service sector took a clear hit; hiring was essentially flat in leisure and hospitality and dropped by nearly 30,000 jobs in retail trade.”
Of the unemployed, the number of permanent job losers declined by 443,000 to 2.5 million, but is 1.2 million higher than in February 2020. The number of persons on temporary layoff, at 1.3 million, was essentially unchanged last month. The number of reentrants to the labor force increased by 200,000 to 2.5 million.
The number of long-term unemployed—or those jobless for 27 weeks or more—decreased by 246,000 in August to 3.2 million but is 2.1 million higher than in February 2020. These long-term unemployed accounted for 37.4% of the total unemployed in August. The number of persons jobless less than five weeks, at 2.1 million, was little changed.
The labor force participation rate, at 61.7% in August, was unchanged over the month and has remained within a narrow range of 61.4% to 61.7% since June 2020. The employment-population ratio, at 58.5%, was also little changed last month.
“The household survey told a somewhat more optimistic story this month,” says Mark Palim, deputy chief economist at Fannie Mae. “The unemployment rate continued to decline, falling two-tenths to 5.2% in August, as household employment continued to show strong gains. However, labor force participation was unchanged last month, as some workers appear to remain hesitant to return to the workforce for various reasons; the participation rate is still 1.6 percentage points below its pre-pandemic level.”
In August, 13.4% of employed persons teleworked because of the COVID-19 pandemic, little changed from the prior month. Roughly 5.6 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, up from 5.2 million in July. Among those not in the labor force, 1.5 million persons were prevented from looking for work due to the pandemic, little changed from July.
Notable job gains occurred in professional and business services, transportation and warehousing, private education, manufacturing, and other services. Employment in retail trade declined over the month.
“The silver lining in the report comes from hiring in both higher-income sectors, like professional and business services and financial activity, and in industries related to the supply chain and production, like transportation and warehousing and manufacturing,” continues Wolf.
Employment in financial activities rose by 16,000 over the month, with most of the gain occurring in real estate (+11,000). But, employment showed little change in other major industries, including construction, wholesale trade, and health care.
