America’s employers added just 235,000 jobs in August, a disappointing gain after two months of solid payroll growth – and economists say the spread of the highly contagious delta variant is to blame for the abrupt drop-off.

“The delta variant surge is the unsurprising story behind August’s big payroll miss,” said Ryan Detrick, chief market strategist at LPL Financial. “Leisure and hospitality jobs, a proxy for economic reopening, were flat month over month. The good news is that we see promising signs delta’s effect will wane in coming months and payrolls will resume growing at a fast clip.”

The August jobs figure the government reported on Friday fell far short of the 728,000 gain forecast by Refinitiv economists, in part because the recent COVID-19 spike forced employers to pull back on hiring. It marked a surprising slowdown after solid gains of 1.1 million in July and 962,000 in June.

BIDEN ADMIN URGES SOME STATES TO EXTEND EXTRA UNEMPLOYMENT BENEFITS AHEAD OF DEADLINE

The hiring plateau likely reflects both growing fears about the highly contagious delta variant and struggles that companies have reported in onboarding new workers, despite a record number of 10.1 million available jobs. In August, 5.6 million people reported they were unable to work because of the pandemic, a rise from 5.2 million a month earlier.

As coronavirus cases spiked and Americans pulled back on spending, hiring in the leisure and hospitality sector – which includes restaurants, bars and hotels – fell to zero last month.

Though it seems obvious in retrospect, economists likely did not factor in – or underestimated – the number of COVID-19 cases across the nation, and how businesses were responding to the rise. 

CONSUMER PRICES SURGE 5% ANNUALLY, MOST SINCE AUGUST 2008

“Flat growth in leisure and hospitality employment suggests that the delta variant is taking a big bite out of the recovery,” said Curt Long, the chief economist and vice president of research at the National Association of Federally-Insured Credit Unions.

While the U.S. was making solid progress with vaccinations – 74.5% of adults have received at least one shot, according to the Centers for Disease Control and Prevention – and infections began falling, cases have rebounded recently as the delta variant spreads among the unvaccinated population. 

The U.S. is averaging about 142,000 new daily cases in the last seven days, compared to the 11,000 seven-day average in June, according to the CDC.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

“Today’s dreadful jobs report — which basically put the recovery on ice for a while — is yet another reminder that the virus is the economy. Delta roars and the recovery retreats,” Justin Wolfers, an economist at the University of Michigan, tweeted on Friday. “In a few weeks we’ll get the geographic detail on the slowdown in jobs growth, and it’ll be interesting to see how much more dramatic it

The US trade deficit swelled to a record high in February. The deficit in goods and services grew 4.8 per cent month on month to $71.1bn in February, according to the US Census Bureau. Exports fell 2.6 per cent or $5bn to $187.3bn, while imports slipped a more modest 0.7 per cent or $1.7bn to $258.3bn.

Federal Reserve officials said the danger of unexpectedly high inflation was roughly equal to that of unexpectedly sluggish inflation. “Most participants noted that they viewed the risks to the outlook for inflation as broadly balanced,” according to minutes of the Federal Open Market Committee’s meeting in March, released on Wednesday.

US health care groups are studying a potential treatment for people suffering from “Covid brain fog”. Akili Interactive has partnered with Weill Cornell Medicine, NewYork-Presbyterian Hospital and Vanderbilt University Medical Center to test Akili’s digital therapeutic AKL-T01 as a treatment for cognitive dysfunction in people who had Covid-19.

Turkey will bring both interest rates and inflation down to the single digits, President Recep Tayyip Erdogan said a week before the central bank holds its first rate-setting meeting with a new governor whose surprise March appointment unnerved investors. Erdogan has long railed against high interest rates, which he said causes inflation. 

High earners and companies that prospered in the pandemic should pay additional tax to show solidarity with those who were hit hardest, according to the IMF. A temporary tax would help to reduce social inequalities exacerbated by the economic and health crisis of the past year, the fund said in its twice-yearly fiscal monitor on Wednesday. 

Workers perform maintenance on the Carnival Magic cruise ship while it is docked at Port Canaveral, Florida
Workers perform maintenance on the Carnival Magic cruise ship while it is docked at Port Canaveral, Florida © AP

Royal Dutch Shell said higher oil prices enabled its exploration and production business to perform well in the first quarter, even as gas trading results were expected to be “significantly below average”. The Anglo-Dutch major said adjusted earnings in the upstream business in the first three months of this year would be “positive”.

Willie Walsh, former head of British Airways, has returned to the airline industry with a blunt warning to Heathrow and other airports not to use the pandemic to jack up prices. The Irish executive, in his new position as head of the International Air Transport Association, accused other parts of the industry of monopolistic pricing.

Carnival, the world’s largest cruise company, said bookings for holidays in 2022 were ahead of 2019’s levels, indicating that there is pent-up demand for cruise trips despite its turbulent year. Carnival said bookings in the first quarter of 2021 were 90 per cent up on the final quarter of 2020.

A huge rise in US government spending will boost the economy over at least the next two years, said Jamie Dimon, chief executive of JPMorgan Chase. He told shareholders that high savings rates, stimulus programmes, a potential infrastructure package and “euphoria around the end of the pandemic” were likely to jump-start the US economy.