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U.S. hiring slows to just 235,000 jobs after 2 strong months

A hiring sign outside a Kohl's Corp. department

A hiring sign outside a Kohl's Corp. department store in Lexington, Ky., on Wednesday. Credit: Bloomberg/Luke Sharrett

The winding down of summer was supposed to set the stage for a full-throated recovery as kids return to school and workers flood back into offices, but the disappointing August employment report Friday was the latest omen that the economic future looks more cloudy than bright.

Employers added just 235,000 new jobs last month. Most forecasters were expecting three times that number, after the economy expanded by about a million jobs in each of the prior two summer months. Retail stores and restaurants and drinking places shed jobs last month, and, even as the unemployment rate dropped to 5.2%, hundreds of thousands more workers were sidelined from working or looking for jobs.

The explanation, yet again, was that the pandemic has delivered another economic curveball. The delta variant of the coronavirus has not only struck hard at the unvaccinated, but also has spread into groups and age cohorts that had seemed relatively unaffected by earlier strains.

As a result, the wave of consumer spending that was propelling the recovery has faltered. So have the plans of many businesses to move back toward normal operations.

And both manufacturing supply chains and the supply of workers remain troubled.

"We're still deep in the hole, and without [government] support, plus with the virus raging, I think the rosy scenario for this fall becomes really dark really fast," said William Spriggs, chief economist for the AFL-CIO, the labor organization.

On Long Island, the jobless rate ticked up to 5.2% in July from 5% in June, suggesting that more residents jumped off the sidelines in search of work but struggled to find positions. Local data for August will be released this month.

Long Island reported a net loss in jobs for July, reflecting typical seasonal changes in employment of public school employees, according to state data. Between July and June, the Island lost 13,600 jobs, a month-over-month decline of 1.1%, the state Labor Department reported. The job losses are normal in July as public school ends for summer break, leaving many support staffers, including bus drivers and cafeteria workers, without regular employment until the fall.

On a year-over-year basis, the Island was up 60,800 jobs compared with July 2020. Nassau and Suffolk are still 9.2% below their July 2019 employment levels.

Nationally, as recently as two months ago, the images in economists' crystal balls looked decidedly bright. Most signs supported the idea of an accelerating recovery.

The scheduled resumption of in-person classes across the nation's public school systems would free up thousands of workers — especially women — who had been constrained by childcare needs.

Expanded federal payments to the unemployed, which conservatives and some other analysts had blamed for worker shortages, were ending.

And the expected large-scale return of workers to their traditional workplaces in urban centers would add to the general "opening up" of the economy.

Now, analysts warn that fewer parents and other caregivers may rejoin the labor force right away. More older people, with renewed fears of health risks, could remain on the sidelines or take the plunge into early retirement.

"I'm frustrated," said Cindy Fain, 62, who lives in rural Virginia and has been searching for full-time work since early this year. "I have not been able to do any kind of in-person networking," she said. "And I'm definitely very concerned about the fact that there isn't any clear horizon with this virus."

Another concern to economists is that the share of prime-age workers getting hospitalized and dying from COVID-19 today looks to be higher than in prior waves of the pandemic.

And outbreaks at the outset of the new school year in some places have heightened uncertainties about the near future.

That doesn't mean the jobs recovery will reverse or even stall. The economy has added jobs for 15 straight months since getting walloped by COVID-19 in spring of last year. With the job additions in August, the nation has regained about three-fourths of the 22 million jobs lost early in the pandemic, and the unemployment rate has fallen from a high of 14.8% in April 2020 to 5.2%, much faster than most economists had projected.

Job openings remain at record levels, and many companies, thanks to billions of dollars of government loans and grants, are looking to get back on their feet.

Still, the resurgent pandemic is starting to temper both optimism and economic activity.

Nick Bunker, chief economist at the jobs posting site Indeed, said he is seeing the pace of new openings slow in such high-contact businesses as beauty and wellness, dentistry and childcare.

Whether there's a broader pullback by employers in the months ahead depends on the path of the delta variant, he said, and on how workers and consumers perceive the risks and to what extent they adjust their lifestyles.

A Gallup poll taken in the middle of last month found that 68% of U.S. adults think the coronavirus situation is getting worse, a dramatic reversal from just two months earlier when nine out of 10 said things were getting better.

With Newsday staff

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