The labor market added only 374,000 private sector jobs in August, missing economists’ average expectations of 625,000 and prompting experts to warn that the delta variant of Covid-19, which has thus far had only a modest impact on the market, could be starting to curtail the economic recovery.
According to ADP’s monthly employment report, August employment data highlights a “downshift” in the labor market recovery marked by a decline in new hires following significant job growth from the first half of the year.
Despite the slowdown, ADP chief economist Nela Richardson says job gains are approaching 4 million this year but are still 7 million jobs lower than employment before the pandemic.
Service jobs continued to head up growth, with the leisure and hospitality sector adding 201,000 jobs, followed by the healthcare industry’s job gains of 39,000.
August job additions were in line with July gains of 326,000, but trail behind additions of more than 600,000 each month since April.
With the unemployment rate of 5.4% still stubbornly above pre-pandemic levels below 4%, experts have cautioned that the post-Covid labor market recovery could drag on for years. Despite strong gains in past months, the Federal Reserve last week said its performance was still too “turbulent” to warrant a change in pandemic-era monetary policy, and Wednesday’s disappointing report should only bolster that argument.
“The delta variant of Covid-19 appears to have dented the job market recovery,” Mark Zandi, the chief economist of Moody’s Analytics, said in a statement alongside the report, adding that the labor market remains strong, but well off its performance in recent months. “Job growth remains inextricably tied to the path of the pandemic.”
What To Watch For
The Bureau of Labor Statistics will release its August jobs report on Friday. Economists expect the economy to have added 720,000 jobs last month, compared to 943,000 in July.
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