Daily Management Review

Strong Job Gains In US In July As Unemployment Hit 16-Month Low


Strong Job Gains In US In July As Unemployment Hit 16-Month Low
According to many analysts, the second half of the current year would get a powerful boost as indicated by a record hiring in the United States in nearly a year in July while wages also continued to rise in the month. Some economists believe growth in the current year would be the highest for the US in almost four decades.
The unemployment rate in the US dropped to a 16-month low of 5.4 per cent, showed a closely watched employment report released by the country‚Äôs Labor Department with more people getting back into the workforce. This was supporting of a report last week that pointed out that the US economy had completely recovered in the second quarter from the sharp downturn in output caused during the very brief but strong pandemic recession.  
"We are charting new economic expansion territory in the third quarter," said Brian Bethune, professor of practice at Boston College in Boston. "The overall momentum of the recovery continues to build."
The survey of establishments showed an increase of 943,000 jobs last month in nonfarm payrolls which was the largest rise since August 2020. Revised data for May and June showed creation of 119,000 additional jobs than was previously reported.
So far this year, 4.3 million jobs have been created by the US economy which was 5.7 million jobs lower than the peak in February 2020.
The strong employment report was lauded by US President Joe Biden. "More than 4 million jobs created since we took office," Biden wrote on Twitter. "It's historic - and proof our economic plan is working."
Pent-up demand for workers in the labor-intensive services sector is driving record employment. Domestic demand is being driven by high rate of Covid-19 vaccinations and almost $6 trillion in pandemic relief money from the government.
However, some unemployed people could be discouraged to return to the labor force because of resurgence in infections primarily caused by the Delta variant of the coronavirus.
"This is the last employment report Chair (Jerome) Powell sees before Jackson Hole, and we have to imagine that he lays the groundwork for a potential September tapering announcement," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York. "We think the odds continue to rise that tapering begins before the end of 2021."
About 40 per cent of the job gains was accounted for by the leisure and hospitality sector where employment increased by 380,000 jobs while payroll employments at restaurants and bars increased by 253,000 jobs.
A huge increase of 240,000 jobs was also noted in government payrolls with 221,000 jobs being added through employment in the local government education sector alone. Education jobs were flattered by a seasonal quirk.
Professional and business services, transportation and warehousing, and healthcare industries also saw strong gains in hiring. While there was a rebound in hiring in the professional and business services, transportation and warehousing, and healthcare industries sector which added 11,000 jobs, payrolls in the manufacturing sector grew by 27,000 jobs.
The only sectors to shed jobs were retail trade and utilities.
"August should be another big month, and September as well, as there are still millions who need to find work quickly," said Chris Low, chief economist at FHN Financial in New York.