Jobs growth decelerates abruptly, with just 235,000 US payrolls added in August

With just 235,000 jobs added, American jobs growth slowed markedly last month. That’s a sharp drop from the huge gains of July (943,000) and June (850,000) and the smallest rise in seven months. The jobless rate fell to 5.2% from 5.4%, while 5.6 million people reported they were unable to work because of the pandemic, up from 5.2 million a month earlier.

Overall, compared to pre-pandemic times, the United States is down by more than 5 million jobs. The job market recovery depends on consumers feeling confident about going to restaurants, to malls, and on vacations; the lackluster numbers suggest that the spread of the Delta variant is dampening consumer demand.

From a sector perspective, hospitality, which had been leading job gains in recent months, stalled in August at zero new payrolls, as Americans pull back on dining-out and travel. This sector, which has the largest pandemic-induced job deficit, saw its unemployment rate tick up to 9.1%.

Retail declined by 28,500 jobs in August, while transportation and warehousing added 53,000 payrolls. As we ramp up to holiday season, all eyes will be on the next months’ BLS reports to see if seasonal hiring will climb back towards pre-pandemic levels as the pandemic disrupts regular seasonal ups and downs.

Encouragingly, manufacturing added a better-than-expected 37,000 jobs, suggesting that supply-chain and labor bottlenecks may be easing up after months of hurdles.

Not all bad news though: Wages continued to accelerate, while weekly jobless filings fell to their lowest levels since the start of the pandemic. The end of stimulus checks – combined with rising wages – might boost supply in lower-paid sectors like retail and hospitality. Better training and upskilling opportunities and more flexible hours are also great ways to attract and retain workers, as confirmed by recent global research by The Adecco Group.

It’s important to note that August is always a tricky month for data collection as it’s when so many take vacations. The Labor Bureau’s estimates are often on the lower side of Wall Street’s. However, the data was collected in the second week of August and may yet mask the full impact of Delta’s spread or Hurricane Ida’s impact, further clouding the emerging narrative of sustained labor market recovery.

While the BLS jobs numbers may bounce around from month to month, Adecco is your reliable and innovative partner through the ebbs and flows of this strange pandemic labor market – and beyond. As a global leader in the staffing industry, we help our clients cut through the noise with relevant, affordable, and sustainable talent solutions. Learn more about the global trends we’re watching.