U.S. unemployment rate falls to 8.4 percent even as hiring slows
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Updated: 11:54 a.m.
U.S. unemployment dropped sharply in August from 10.2 percent to a still-high 8.4 percent, with about half the 22 million jobs lost to the coronavirus outbreak recovered so far, the government said Friday in one of the last major economic reports before Election Day.
Employers added 1.4 million jobs last month, down from 1.7 million in July and the fewest since hiring resumed in May. And an increasingly large share of Americans reported that their jobs are gone for good, according to the Labor Department report.
Altogether, that was seen by economists as evidence that the recovery is going to be slow and uneven.
“The fact that employment is settling into a trend of slower, grinding growth is worrisome for the broader recovery,” said Lydia Boussour, an economist at Oxford Economics.
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Still, President Donald Trump, who is seeking reelection in less than two months amid the worst economic downturn since the Depression in the 1930s, celebrated the report, tweeting, “Great Jobs Numbers!” and adding that unemployment fell below 10 percent “faster and deeper than thought possible.”
The drop was sharper than most economists expected and mainly reflected what they said were businesses recalling workers who had been temporarily laid off, rather than expanding with new employees.
Private companies added just over 1 million jobs in August, with the government providing nearly 350,000 others, including a quarter-million temporary census workers. The fall in private hiring from 1.5 million jobs in July was seen as a sign that employers remain cautious with the virus still out of control.
The outbreak is blamed for about 187,000 deaths and almost 6.2 million confirmed infections in the U.S., by far the highest totals in the world.
Friday’s figures were the second-to-last employment report before the presidential election Nov. 3. For most voters, the employment report is the most visible measure of the economy.
Richard Moody, chief economist at Regions Financial, noted that about half the private-sector job gains were in retail, a category that includes restaurants, hotels and casinos, and health care. All have benefited from the reopening of most states' economies.
“When the reopening effect wears off, the overall job gains in coming months should be considerably smaller," he said.
Retailers added 250,000 jobs, and restaurants, hotels and entertainment firms gained 174,000. Health care added 90,000. But manufacturers, which are enjoying a jump in demand, particularly for cars, added just 29,000 jobs, one-tenth of their job growth in June. Construction added just 16,000 despite strong home building.
After an epic collapse in the spring, when the economy shrank at a roughly 30 percent annual rate, growth has been rebounding as states have reopened at least parts of their economies. But uncertainty is running high, and many companies are still cutting jobs, with most of the layoffs permanent.
Casino and hotel operator MGM Resorts, slammed by declines in travel and tourism, said last week that it is eliminating 18,000 jobs. Coca Cola, which derives half its sales from stadiums, theaters and other venues that have been largely shut down, is offering buyouts to 4,000 employees. Bed, Bath & Beyond will shed 2,800 jobs.
More than 20 percent of small businesses are still closed, a figure that has been flat since June, according to Homebase, a provider of time-management software to small companies.
In Friday's report, less than half of the 13.6 million unemployed said their layoffs were temporary, down from three-quarters in April.
Brandon Stephens, president of Christmas Decor, is struggling with the uncertainty. The business has 300 franchised outlets across the U.S. that are mostly landscape and pest control companies but turn to setting up lights and decorations for Christmas, Halloween and other holidays in the colder months. That switch typically enables the franchisees to save 3,000 jobs.
Stephens said he is seeing a big increase in interest in holiday decorations from consumers. But businesses are much more cautious about committing to big holiday displays.
“The challenge with our business is we don’t know if we’re screwed until the last couple of weeks of the year,” he said.
Roughly 29 million Americans are receiving state unemployment benefits but are no longer drawing an extra $600 a week in federal jobless aid, which expired more than a month ago. The Trump administration has set up a program to provide some of the unemployed with $300 a week. But the new rules will make many ineligible.
One consequence of the crisis is that rising stress and anxiety are evident at therapists' offices and mental health hotlines around the country.
"Not many days go by where I don’t have a couple where one partner or both are not working or furloughed,” said Todd Creager, a therapist in Southern California who treats mostly middle- to upper-middle-class adults.