The Bureau of Labor Statistics released its August jobs report on Friday, and the results looked significantly different than those of the past several months.
The U.S. economy added 235,000 jobs in August, down from 962,000 in June and 1.1 million in July. The August report pointed to a far greater economic slowdown than experts had predicted: Financial data firm FactSet estimated earlier this week that the U.S. added 756,500 jobs last month.
Experts told The Wall Street Journal that the muted numbers were largely due to the rise in Covid cases in the U.S. The seven-day average number of daily cases in the U.S. rose fivefold between mid-July and mid-August.
Economists say that service businesses requiring in-person interactions, such as retail stores and restaurants, held off on hiring amid the spike in Covid cases. Elise Gould, senior economist at the nonprofit think tank Economic Policy Institute, analyzed data on OpenTable and found that the number of restaurant reservations in July 2021 was down 4.4 percent compared with the same period in 2019, while in August, reservations were down 9.4 percent.
"We do see some of those job opportunities being reduced in areas where the reopening is slowing down," Karen Fichuk, CEO of staffing consultancy Randstad North America, tells Inc. "We also see it having an effect on job seekers wanting to return to the workforce in those types of jobs. People have concerns about safety."
The unemployment rate declined to 5.2 percent in August from 5.4 percent in July. Labor force participation remained unchanged, which suggests that the number fell because people are getting jobs, as opposed to giving up on looking for them.
Many businesses, including some large retailers, are trying to attract new workers and retain existing ones with increased wages or benefits. Walmart on Thursday announced a $1 increase in hourly pay for more than 550,000 workers. Target recently rolled out a debt-free college program, while CVS revealed it would increase starting wages to $15 soon.
The U.S. economy has gained back about 17 million jobs since the pandemic-induced recession began last March, but is still down about 5 million jobs compared with February 2020.