Unemployment rate falls below 10% for first time since March
The high U.S. unemployment rate improved in August, falling to 8.4% last month from 10.2% in July, as more Americans went back to work. But the rate of hiring has slowed each month this summer, a signal that the economic recovery from the coronavirus pandemic may be losing steam.
Employers added 1.4 million jobs in August, the Labor Department said on Friday. That pace of hiring would have been extraordinary before the coronavirus pandemic, yet it represents a slowdown from the 1.8 million jobs added in July and 4.8 million jobs added in June, when states allowed businesses to reopen following widespread shutdowns in March.
Hiring was slightly better than the 1.3 million new jobs forecast by economists, with Bankrate senior economic analyst Mark Hamrick calling the drop in the jobless rate "a pleasant surprise." But unemployment remains elevated, and recent layoffs by major companies such as Coca-Cola and MGM Resorts International signal that some industries, such as restaurants and travel, continue to struggle with lower slack demand as many consumers remain cautious amid the ongoing pandemic.
"The job market broadly is something like a whirlpool, where beneath the surface there are swift cross currents including job loss," Hamrick said in an emailed statement. "Many of the recent large company announcements regarding furloughs and job cuts have yet to hit, indicating that the economy continues to face challenges in the months to come."
Temporary hiring boost
Hiring in August was bolstered by the federal government, with the Census Bureau adding 238,000 temporary workers. But in a positive sign other job gains were widespread, led by the retail industry, professional and business services, leisure and hospitality as well as education and health services, the Labor Department said.
"While there is a bit of a slowdown in hiring once you strip out the Census numbers, this is still a positive surprise," Brian Coulton, chief economist at Fitch Ratings, told investors in a note. "We still see economic growth slowing as we get into the fourth quarter, as the boost to activity from re-opening fades, but the summer rebound has been stronger than we initially thought."
Economists remain cautious about the months ahead, predicting that the labor market may not see the larger gains experienced earlier this summer. One reason: The rate of coronavirus infections, while moderating in most states, is settling at an elevated level. Charles Evans, president of the Federal Reserve Bank of Chicago, said in a speech on Thursday that U.S. economic activity may not return to pre-pandemic levels until late 2022.