According to ADP’s monthly employment report, August employment data highlights a “downshift” in the labor market recovery marked by a decline in new hires following significant job growth from the first half of the year.
Despite the slowdown, ADP chief economist Nela Richardson says job gains are approaching 4 million this year but are still 7 million jobs lower than employment before the pandemic.
Service jobs continued to head up growth, with the leisure and hospitality sector adding 201,000 jobs, followed by the healthcare industry’s job gains of 39,000.
August job additions were in line with July gains of 326,000, but trail behind additions of more than 600,000 each month since April.
With the unemployment rate of 5.4% still stubbornly above pre-pandemic levels below 4%, experts have cautioned that the post-Covid labor market recovery could drag on for years. Despite strong gains in past months, the Federal Reserve last week said its performance was still too “turbulent” to warrant a change in pandemic-era monetary policy, and Wednesday’s disappointing report should only bolster that argument.
“The delta variant of Covid-19 appears to have dented the job market recovery,” Mark Zandi, the chief economist of Moody’s Analytics, said in a statement alongside the report, adding that the labor market remains strong, but well off its performance in recent months. “Job growth remains inextricably tied to the path of the pandemic.”
The August jobs report, set to be released Friday, will give policymakers some insight into how the economy has responded to the delta surge. The U.S. added 943,000 jobs last month, according to the most recent report, but that data was compiled before the Centers for Disease and Control and Prevention first raised alarms about the transmissibility of the delta variant.
Though it may still take several months to assess the total impact of the delta variant, economists expect that women and Black and Hispanic workers, who were more likely to lose their jobs amid the onset of the pandemic, will continue bearing disproportionate burdens.
What To Watch For
The onset of the pandemic wiped out roughly 8.8 percent of jobs in public education as schools were forced to shutter, but Pollak said the delta surge is unlikely to trigger deeper layoffs. Instead, she expects delays to office reopenings driven by school closures to limit the recovery of other jobs reliant on work travel and office presence.
The Bureau of Labor Statistics will release its August jobs report on Friday. Economists expect the economy to have added 720,000 jobs last month, compared to 943,000 in July.
I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at email@example.com. And follow me on Twitter @Jon_Ponciano