Total nonfarm payroll employment rose by 943,000 in July, while the unemployment rate fell by 0.5 percentage points to 5.4%, according to the Bureau of Labor Statistics’ latest report.
The number of unemployed persons in the U.S. fell by 782,000 to 8.7 million in July—down considerably from the highs seen from February to April 2020, but well above the unemployment level prior to the COVID-19 pandemic (5.7 million in February 2020.)
Of the unemployed, the number of persons on temporary layoff fell by 572,000 to 1.2 million in July—down substantially from 18 million in April 2020, but 489,000 higher than in February 2020. The number of permanent job losers fell by 257,000 to 2.9 million, up 1.6 million from February 2020.
The labor force participation rate was little changed at 61.7% in July, and has remained between 61.4% and 61.7% since June 2020. The employment-population ratio rose by 0.4 percentage points to 58.4%, up 1 percentage point since December 2020 but down 2.7 percentage points from February 2020.
“The increase in participation is also a welcome sign given that it has been slow to recover toward its pre-pandemic level; participation is still 1.6 percentage points lower than in February 2020, as many people remain hesitant to return to the workforce for various reasons,” says Doug Duncan, chief economist at Fannie Mae. “Additionally, there were 930,000 voluntary job leavers in July. … Average hourly earnings growth accelerated to a 4 percent year-over-year pace, which we believe could potentially exacerbate pricing pressures already present in the economy.”
In July, 13.2% of employed persons worked from home due to the COVID-19 pandemic, down from 14.4% the previous month. At the same time, 5.2 million persons reported that they had been unable to work because their employer had closed or lost business due to the pandemic—down from 6.2 million in June. Among those not in the labor force, 1.6 million were prevented from looking for work due to the pandemic, unchanged from June.
The leisure and hospitality sectors saw the strongest job gains in July, up 380,000 from June. Employment also rose by 221,000 in local government and education and by 60,000 in professional and business services. Overall, construction employment showed little change.
“Residential building jobs increased 0.9% month over month in July and have surpassed pre-COVID levels; it’s good to see progress, but it’s not enough,” says Odeta Kushi, First American deputy chief economist. “In May, the ratio of construction hires per job opening was lower than pre-pandemic levels, implying it is more difficult to hire now. Since hammers build homes, labor shortages increase the cost of building and slow the pace of construction, which is not what’s needed to alleviate the housing supply shortage.”
