By Gus Faucher
PNC chief economist
The August jobs report was solid, with the U.S. economy adding 1.371 million jobs in August, according to a survey of employers. After employment fell by more than 22 million, or 15%, between February and April as the coronavirus pandemic hit the United States, the economy has added back 10.6 million jobs since May. Still, employment in the U.S. is down by 11.5 million, or almost 8%, from its February peak. The private sector added 1.027 million jobs in August, while government added 344,000 jobs over the month. Much of the government boost came from hiring for the federal Census.
There were small downward revisions to job growth in June and July. The past four months have seen the largest employment gains on record. But after adding 2.7 million jobs in May and 4.7 million jobs in June, job growth slowed in July (1.7 million) and then August.
The unemployment rate fell to 8.4% in August, from 10.2% in July and a peak of 14.7% in April. However, before the pandemic hit, the unemployment rate was 3.5% in February, at a 50-year low. The number of people reporting themselves as employed in the household survey (different from the survey of employers) rose by 3.756 million in August, while the number of people in the labor force (either working or looking for work) rose by almost 1 million. The labor force participation rate was 61.7% in August, up from 61.4 percent in July and a cyclical low of 60.2% in April, but down from 62.7% in February.
The U-6 rate, which measures unemployment, underemployment, and discouraged workers, fell to 14.2% in August from 16.5% in July and almost 23% in April. However, it was below 9% earlier in the year.
Job gains in August were broad-based. Goods-producing industries added 43,000 jobs over the month, while private services-providing industries added almost 1 million jobs, with increases of 249,000 in retailing, 197,000 in professional/business services, 174,000 in leisure/hospitality services, and 147,000 in education/health care. However, employment levels in all industries are all down from before the crisis.
The August jobs report was solid, with job gains of 1.4 million over the month. The U.S. economy has added back a little less than one-half of the jobs it lost between February and April, and the unemployment rate has fallen quickly, although it is still more than double its pre-Viral Recession level. The federal government provided a boost to job growth in August with hiring for the decennial Census, and job growth will be weaker over the next couple of months as those temporary employees wrap up their work.
A solid economic recovery in the United States is underway, but the path forward will be rocky. Job growth will slow over the rest of 2020 and throughout 2021 as permanent business closures increase. Risks to the labor market recovery are to the downside, including a potential inability of the Congress to provide more fiscal stimulus, the continued spread of the coronavirus, the potential for widespread business failures and layoffs, and the uncertainty surrounding the presidential election.
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