After the stock market had its worst day since June 11, falling more than 800 points on Thursday, there were fears of a meager August jobs report. On Friday, the Bureau of Labor Statistics reported some better-than-expected news. The United States added nearly 1.4 million jobs in August.
Furloughed workers have been brought back—albeit, at a somewhat lower level than we saw in the spring. The 1.4 million jobs was an upward, pleasant surprise to experts, but the numbers are still down from July’s 1.7 million and a strong 4.8 million new jobs added in June. We are still about 11 million jobs less than where we were pre-pandemic. On a positive note, the unemployment rate fell from a high of almost 15% in April to about 8.4% in August. We are still, unfortunately, far from the pre-Covid-19 unemployment rate, which was 3%.
The numbers reflect the lightest amount of hiring since May. The U.S. has almost recouped half of the 22 million jobs lost during the pandemic. Vice President Mike Pence said, “It’s another great day for American jobs and American workers.” He believes the reported numbers are “real evidence that the American comeback is underway.”
A large portion of the new jobs is related to companies bringing back workers, as opposed to hiring new people. There are still concerns that many of the temporary layoffs will turn into permanent job losses. Lydia Boussour, an economist at Oxford Economics, pointed out, “The fact that employment is settling into a trend of slower, grinding growth is worrisome for the broader recovery.” According to Boussour, the data “confirms that the labor market has entered a frustratingly slower second phase of the recovery.”
The hardest-hit sectors showed some life. Retail, restaurants, bars, leisure and hospitality, which were badly impacted had some growth. There were gains in education, health services, financial services, transportation and manufacturing.
The numbers may be a little inflated, as there was a boost in the temporary hiring of 238,000 people for the 2020 census. Reuters reports that there are still challenges ahead, as “United Airlines said on Wednesday it was preparing to furlough 16,370 workers on Oct. 1. American Airlines has announced its workforce would shrink by 40,000, including 19,000 involuntary cuts. Ford Motor said it was targeting 1,400 U.S. salaried jobs for elimination by year’s end. Mass transit rail operators are also eyeing furloughs.”
Tony Bedikian, head of global markets at Citizens Bank, said, “We are still moving in the right direction and the pace of the jobs recovery seems to have picked up, but it still looks like it will take a while—and likely a vaccine—before we get back close to where we were at the beginning of this year.” Bedikian added, “We continue to be optimistic that the economy has turned a corner and that we’ll continue to see steady progress.”
The positive number could unfortunately hurt Americans. Congress couldn’t come up with another round of stimulus for the country due to political disagreements between Republicans and Democrats. They’ve also demured on deciding to reenact the extra $600-per-week unemployment enhancement and return the prohibition on evictions.
This is not hard data, but I’ve noticed a small trend demonstrating an increase in hiring. Using LinkedIn, the largest social media site dedicated to white-collar professionals as a barometer, March though the beginning of August, it was rare to see people on LinkedIn posting that they’ve found a new job. Lately, I’ve noticed an increase in the number of people sharing the good news that they have procured a new job. Although this is anecdotal evidence, the site has over 600 million professionals and offers interesting insights into the direction of the job market.
Although the jobs report was relatively positive, we still have a long way to go.