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US July Payrolls Up 1.76 Mln, Unemployment 10.2%

The July employment report reflected continued improvement in the economy, but the rate at which the US is digging out the hole it fell into in March and April clearly slowed.

That recovery is likely to be hindered further by the rebound in COVID-19 cases across several states, which forced some states and businesses back into more restrictions after initially reopening.

Nonfarm payrolls rose by 1.76 million in July, above the 1.68 million gain expected, the Bureau of Labor Statistics reported Friday. There was a small downward revision to June payrolls to a 4.79 million gain and a modest upward revision to May payrolls to a 2.73 million increase.

Private payrolls rose by 1.46 million after a large increase of 301,000 in government payrolls is excluded. Analysts had expected private payrolls to rise by 1.53 million. Most of the government payrolls gain was in state and local education, as school systems gear up for a very unusual school year.

The largest payrolls improvement was the leisure and hospitality sector, which added 592,000 jobs in July after a 1.98 million gain in June, with a 502,000 gain in the food services sector.

Retail trade jobs rose by 258,000 after an 827,000 increase in June, with clothing stores making up 129,000 of the July gain. Health care added 191,000 jobs.

The services sector added a total 1.42 million jobs in July after a 4.22 million increase in June.

Manufacturing jobs rose by only 26,000 and construction added 20,000 jobs. The goods sector added a total of 39,000 jobs.

Average hourly earnings rose by 0.2% after a 1.3% decline in June, but the year/year rate was still elevated at 4.8%, compared with 3.0% in February before the COVID-related shutdowns.

In the household survey, the unemployment rate fell to 10.2% from 11.1% in June, better than expectations for a smaller decrease to 10.5%.

The BLS again said if workers that were temporarily furloughed due to COVID-19 were labeled as unemployed on temporary layoff rather than as simply absent from work, the unemployment rate before seasonal adjustment would have been one percentage point higher, the same magnitude of miss as in June and smaller than the misses in March and April.

The labor force participation rate ticked down to 61.4% from 61.5% in June, but was still below the 62.7% rate in March prior to the full COVID impact. In July, the number of employed rose, while the number of unemployed declined, reflected in the decline in the unemployment rate.

The wider U-6 rate, which represents those underemployed and those working part-time rather than full-time, fell to 16.5% from 18.0% in June.

Kevin Kastner

Julie Ros

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