US hiring slows sharply in August as delta variant stunts job gains
US economy added 235K jobs in August
U.S. hiring slowed sharply in August as the resurgence in new COVID-19 infections impeded job gains.
Nonfarm payrolls increased by 235,000 workers in August as the unemployment rate fell to 5.2%, the Labor Department said Friday. Analysts surveyed by Refintiv had expected the addition of 728,000 jobs and the unemployment rate to fall to 5.2%.
The job gains in the July report were revised higher by 110,000 to 1.053 million.
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The August jobs report "suggests that the Delta variant is beginning to weigh on the economy," said Paul Ashworth, chief U.S. economist at research firm Capital Economics.
Friday's disappointing report was released two days before the $300 per week in supplemental unemployment benefits is set to expire. Economists are still assessing the impact that the Child Tax Credit, which pays families up to $3,600 per child per year, will have on the labor force.
Notable job gains occurred last month in professional and business services (+74,000), transportation and warehousing (+53,000), private education (+40,000) and manufacturing (+37,000).
Employment in leisure and hospitality was unchanged in August following the addition of 380,000 jobs in July.
Retailers lost 29,000 workers, with the biggest declines occurring in food and beverage stores (-23,000) and in building material and garden supply stores (-13,000). Retailers have lost 285,000 laborers since February 2020.
The labor force participation rate was unchanged at 61.7% and has held in a range between 61.4% and 61.7% since June 2020.
Average hourly earnings rose 0.6% in August and 4.3% year over year. Economists anticipated a 0.3% month-over-month increase and a 4% annual gain.
The U.S. economy has averaged 586,000 jobs gained per month this year. Nonfarm employment has risen by 17 million since April 2020, but is down 5.3 million from prepandemic levels.
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This report will "certainly help keep the Fed on hold on their tapering plans, likely for the rest of the year," said Brad McMillan, chief investment officer for Commonwealth Financial Network.
Economists were expecting the August data to sway the Federal Reserve's decision about when to begin tapering its $120 billion per month in asset purchases. Federal Reserve Chairman Jerome Powell said last week at his Jackson Hole symposium speech that the recent surge in inflation was a "cause for concern" but that job gains had not yet met the central bank's expectations.
Fed watchers took the comments as a sign the central bank could begin scaling back its asset purchases later this year. Powell said the timing of the tapering was not indicative as to when rate hikes would begin.