US Added 1.4 Million Jobs In August, While Unemployment Rate Fell To 8.4%

KEY POINTS The jobless rates declined in the month for adult men (to 8%), adult

KEY POINTS

  • The jobless rates declined in the month for adult men (to 8%), adult women (8.4%), teenagers (16.1%).
  • The number of Americans on temporary layoff decreased by 3.1 million to 6.2 million in August
  • But the number of permanent job losers increased by 534,000 to 3.4 million in August

The U.S. economy added 1.4 million jobs in August, while the jobless rate dropped to 8.4% from 10.2% in the prior month, the U.S. Bureau of Labor Statistics reported Friday.

The number of unemployed people dropped by 2.8 million to 13.6 million, the fourth straight month of such declines.

Within segments of the workforce, the jobless rates declined in the month for adult men (to 8%), adult women (8.4%), teenagers (16.1%), Whites (7.3%), Blacks (13%), and Hispanics (10.5%). The jobless rate for Asians (10.7%) remained unchanged from July.

The number of Americans on temporary layoff decreased by 3.1 million to 6.2 million in August – a significant drop from the high of 18.1 million in April.

“These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus pandemic and efforts to contain it,” the BLS stated. “In August, an increase in government employment largely reflected temporary hiring for the 2020 Census. Notable job gains also occurred in retail trade, in professional and business services, in leisure and hospitality, and in education and health services.”

But the number of permanent job losers increased by 534,000 to 3.4 million in August. This figure has climbed by 2.1 million since February.

The long-term unemployed — people who have been jobless for 27 weeks or more — totaled 1.6 million, which is roughly equal to July figures.

Some analysts generally welcomed the jobs report but expressed some concerns.

Mark Hamrick, senior economic analyst for Bankrate, told International Business Times by email that “The decline in the unemployment rate to well below 10% is a pleasant surprise, raising the hope that further improvement will be seen in the months ahead.”

But Hamrick cautioned that with 13.6 million persons still listed as unemployed as of Labor Day, a substantial number of Americans have little to celebrate about the status of the workforce.

“On the positive side, the number on temporary layoff plunged by 3.1 million, still with more than 6 million in that precarious position,” Hamrick added. “Among the 1.4 million jobs brought back last month, 344,000 were in government, most at the federal level. Some 238,000 were temporary census workers.”

Dan North, chief economist at Euler Hermes, welcomed the jobs data.

“If summer has to come to an end, this was a great way to do it,” North told IBT. “The August employment report was very strong on almost all aspects… The composition of the labor force was also very encouraging as the number of people who became employed rose by 3.8 million and the number of people becoming unemployed fell by 2.8 million.”

Albert Brenner, director of asset allocation strategy at People’s United Advisors, an asset management firm, told IBT things are positive but not as strong as they have been.

“This appears to reflect some of the concern over the state of the economy and the fact that we are still awaiting additional stimulus relief from Congress,” he said.

Josh Lipsky, director of programs and policy, global business and economics program at the Atlantic Council think tank said the jobs report confirms that the jobs recovery has been too slow and without more support it may stall out, given that talks between the White House and top Democrats over unemployment benefit extensions have stalled.

Lipsky noted that 20% of small businesses may never reopen.

“Congress is becoming comfortably numb to the hardship millions of Americans are facing,” he added. “While the net jobs created is welcome news, the economic headwinds going into the election remain significant. Since World War II, no President has been reelected with unemployment above 8%.”

Nicole Goldin, nonresident senior fellow, global business and economics program at the Atlantic Council commented: “Though stocks are at near-record highs, today’s jobs numbers, alongside yesterday’s improved but still historically high new unemployment claims, speak to the fact that the pandemic continues to stymie the real economy — suppressing small businesses, disrupting supply chains, and forcing continued layoffs and closures.”

Goldin added: “With a large share of the nation’s children still unable to get ‘back to school,’ millions of caretakers — especially women bearing the brunt of childcare or education — can’t get back to work. Jobs for youth remain in short supply, while prospects for workers of color remain dim.”

Hamrick of Bankrate further noted that the job market is “something like a whirlpool, where beneath the surface there are swift cross-currents including job loss.”

Many of the recent large company announcements regarding furloughs and job cuts have yet to hit, he warned, indicating that the economy continues to face challenges in the months to come.

“With the national unemployment rate still elevated, and with New York and Los Angeles recently suffering through jobless rates above 16%, the urgency of passing another round of federal relief legislation hasn’t lifted in Washington,” Hamrick stated. “While some elected officials may be focused on the election now 60 days away, their responsibility to serve the broader part of the American people hasn’t been excused.”

Carlton Neel, CEO of Chaikin Analytics, a quantitative investment research firm based in Philadelphia, told IBT that there were solid job gains again in August as states reopened their economies and business improved.

“However, the unemployment rate remains high, particularly in service areas of the economy,” Neel cautioned. “Travel and leisure remain stressed as there are both state-imposed restrictions and widespread self-imposed limits. Until officials and the population as a whole believe the COVID-19 crisis is behind us, unemployment and economic stress will remain elevated for the foreseeable future.”

North suggested the jobs report will likely strengthen the Republican position that only a little more stimulus is needed.

“Democrats could in turn say ‘See how well CARES worked? Well, we won’t get that boost if we don’t have another big stimulus,’” he added.

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