The U.S. job market performed well for the month of July, exceeding analysts’ expectation. 1.763 million jobs were added while unemployment rate fell by 0.9%. Also, average hourly earnings rose by 0.2%, ending two months of decline. By itself, July’s jobs report may depict a positive outlook in the U.S. job market. But if we were to closer into the data, there is little to get excited about.
First off, a slowdown in jobs growth can be seen in July by comparing with the previous two months when the job market started its recovery from the pandemic. In June, 4.8 million jobs were added while in May, 2.5 million jobs were added, thus making the 1.763 million jobs added in July seems insignificant. The main reason for the slowdown is the resurgence of the number of COVID-19 cases in July.
Next, although jobs were added in July, if we were to compare the nonfarm employment level in July with the pre-COVID-19 level in February, we see that the level in July was 12.9 million (8.4%) lower than the level in February. This indicates that the job market is far from full recovery. All in all, unless progress is made in the containment of the pandemic, the road to recovery for the job market will be a long one.