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The Labor Department said in its Friday report that employers added 1.8 million jobs last month, sending the unemployment rate down for the third straight month to 10.2%, topping Wall Street's expectations.
"The labor market continues to climb its way out of the hole created by COVID-19," said Jason Pride, chief investment officer of private wealth at Glenmeade.
The private sector alone created more than 1.4 million jobs, with leisure and hospitality once again accounting for the bulk of those, adding 592,000 new positions.
Almost all of those gains — 504,800 — stemmed from food and drinking establishments, one of the industries hit hardest by the pandemic as states ordered restaurants and bars to close and directed Americans to stay at home.
Arts and entertainment added more than 87,000 positions, while amusements, gambling and recreation added 99,600.
However, performing arts and sports lost about 12,800 workers.
"The recovery continues to be primarily driven by continued rehiring in the hardest-hit industries, including leisure and hospitality and retail," said Daniel Zhao, senior Glassdoor economist.
Retail expanded by 258,300, with clothing and clothing accessory stores making up the biggest share of workers in that sector, at 120,800.
Job growth also took place in the education and health services sector, which expanded by 215,000 workers in July. Healthcare increased by 191,400 workers, with dentists, physicians, diagnostic laboratories, home health care services and outpatient care centers all hiring workers last month.
Hospitals added 27,000 workers, but nursing homes shed 28,100 positions. Child day-care services accounted for 45,100 workers.
Transportation and warehousing increased its payroll by 37,900, and construction rose by 20,000. Manufacturing added 26,000 workers.
The public sector also saw job growth last month, with governments hiring 301,000 workers, some 241,000 of whom were at the local level. The federal government brought 27,000 employees on board, while states added 33,000.
The report marked the third consecutive month of job growth in the millions, indicating a slow -- but steady -- improvement.
Still, the economy has so far added back less than half -- about 42 percent -- of the 22 million jobs it lost during the pandemic, data show. There are still 10.6 million more out-of-work Americans than in February.