The U.S. economy created 1.4 million jobs in August, powered in part by the tens of thousands of workers — many temporary — hired by the federal government, the Labor Department said Friday.
The payroll report showed the jobless rate tumbled unexpectedly to 8.4%, down from 10.2% in June, as employers continued to call back workers who had seen their jobs vanish as a result of the coronavirus pandemic.
“We are still moving in the right direction and the pace of the jobs recovery seems to have picked up, but it still looks like it will take a while – and likely a vaccine – before we get back close to where we were at the beginning of this year,” said Tony Bedikian, head of global markets at Citizens Bank.
Government hiring helped boost the figure -- the lowest in four months -- with the addition of 344,000 employees, which accounted for about one-fourth of the total gains. The increase stemmed largely from the federal government's hiring of 251,000 workers, 238,000 of whom were temporary Census workers.
And despite fears about major budget shortfalls, local governments hired 95,000 employees last month. (State governments shed 2,000 workers.)
Retail also contributed strongly to job creation last month with 249,000 positions. General merchandise stores, including warehouse clubs and supercenters, accounted for 84,000 of those gains, while more than 116,000 stemmed from general merchandise stores. Motor vehicles and parts dealers added more than 22,000, and electronics and appliance stores went up by 20,800.
Leisure and hospitality, the hardest-hit sector during the pandemic, also continued to contribute to major job gains: Last month, the sector increased by 174,000, a majority of which -- 133,600 --- stemmed from bars and restaurants.
Education and health services jumped by a combined 147,000. Education rose by 56,900, and health care and social assistance increased by more than 90,000, with gains in physician offices (26,500), dentists (21,600) and hospitals (14,000). Nursing homes and other residential care facilities lost 13,700 workers.
Financial activities increased by 36,000, manufacturing rose by 29,000 and wholesale trade was up by 14,000.
"Gains in some of the hardest-hit sectors, including leisure and hospitality, retail trade, education and health services reflect and support improvements in consumption," said Robard Williams, Moody's Investors Service's senior vice president. "We expect the labor market recovery to continue over the second half of this year, but the decline in unemployment will be very gradual as economic activity will remain well below pre-pandemic levels. Business and consumer sentiment will remain subdued as long as there is uncertainty regarding a potential new surge of the virus. "