This week’s report from ADP suggested that the jobs recovery stalled in July, but it turns out only to have slowed a bit in momentum. The US economy added another 1.8 million jobs, with unemployment dropping down to 10.2%. The jobs number is well below June’s 4.79 million or May’s 2.73 million, but it still shows an overall rapid expansion of hiring despite fears of new COVID-19 spikes:
Total nonfarm payroll employment rose by 1.8 million in July, and the unemployment rate fell to 10.2 percent, the U.S. Bureau of Labor Statistics reported today. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it. In July, notable job gains occurred in leisure and hospitality, government, retail trade, professional and business services, other services, and health care. …
The labor force participation rate, at 61.4 percent, changed little in July, following increases in May and June. Total employment, as measured by the household survey, rose by 1.4 million in July to 143.5 million. The employment-population ratio rose by 0.5 percentage point to 55.1 percent but remains lower than in February (61.1 percent). (See table A-1.)
A few subtleties in the numbers should be noted. The picture on part-time work brightened considerably in July, as employers apparently added hundreds of thousands of positions to meet new demand. Other employers who had cut hours may have ended that practice, too:
In July, the number of persons who usually work part time rose by 803,000 to 24.0 million, while the number who usually work full time, at 119.5 million, was little changed. (See table A-9.)
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 619,000 to 8.4 million in July, reflecting a decline in the number of people whose hours were cut due to slack work or business conditions (-658,000). The number of involuntary part-time workers is 4.1 million higher than in February. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. This group includes persons who usually work full time and persons who usually work part time. (See table A-8.)
Interestingly, wages rose, as did hours and especially overtime:
The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.5 hours in July. In manufacturing, the workweek rose by 0.7 hour to 39.7 hours, and overtime increased by 0.3 hour to 2.8 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 34.0 hours.
Those are all signs of improvement in the health of a jobs market.
The immediate media reaction was to emphasize the decline from the June report of 4.7 million jobs added. Most of the spin wasn’t as bad as this from ABC, however:
JUST IN: U.S. unemployment rate dropped to 10.2% in July, falling slightly below June's 11.1%, according to the Bureau of Labor Statistics. https://t.co/ZZTfGbjxWj
— ABC News (@ABC) August 7, 2020
“Slightly”? It dropped by almost a full point, which is hardly “slight” in unemployment rate terms. Also, 1.8 million jobs added is still an outstanding number and hardly a “slight” change, especially in the context of added restrictions on commerce and a murky situation with school reopenings. The ADP report on Wednesday looked more like a full stall on job creation, which would have truly been worrisome, but this still shows significant dynamism in the marketplace. It matches up with the weekly jobless claims numbers too, showing millions of people coming off the paid benefits over the last eight weeks even though they had not yet expired.
Bear this in mind, too: the BLS surveys took place in the second and third weeks of the month. If one watches the jobless claims figures as a measure, that was the rockiest period of the month. By the end of the month, the situation was likely a bit rosier than this report indicates — although the stall on an aid package in Congress might end up impacting this month’s job creation.
CNBC was one of the few media outlets to note that the report beat expectations. Steve Liesman finds himself “impressed” by both the numbers and the accuracy of the earlier projections, which he notes was the closest analysts have come so far in the pandemic to the real numbers:
Two months of record-setting payroll growth slowed in July but was still better than Wall Street estimates even as a rise in coronavirus cases put a damper on the struggling U.S. economy.
Nonfarm payrolls increased 1.763 million for the month. The unemployment rate fell to 10.2% from its previous 11.1%, also better than the estimates from economists surveyed by Dow Jones. An alternative measure that includes discouraged workers and the underemployed holding part-time jobs for economic reasons fell from 18% to 16.5%.
The consensus was for growth of 1.48 million and an unemployment rate of 10.6%.
One has to wonder if some other outlets had their takes pre-written, and just plugged the numbers in later.