U.S. job growth fastens in July, adding 943,000 jobs

U.S. job growth fastens in July amid demand for workers in the labour-intensive services industry. It suggests that the economy sustained its strong momentum at the start of the second half of the year.

According to the labour department, non-farm payrolls were boosted by 943,000 jobs last month after increasing 938,000 in June. Remarkably, analysts polled by Reuters estimated payrolls to increase by 870,000.

However, job gains were supported by shifts in seasonal employment at schools caused by a coronavirus. Remarkably, estimates ranged from 350,000 to 1.6 million.

Moreover, the employment report also showed that the unemployment rate fell to 5.4% from 5.9% in June.

According to Sam Bullard, a senior economist at Wells Fargo in Charlotte, labour market conditions seem to be healthy at the start of the third quarter. Notably, labour-intensive service businesses resume hiring given strong pent-up demand.

Before the pandemic hit, education employment normally decreased by nearly 1 million jobs in July as schools closed. However, this year many students are in summer school after disruptions caused by the coronavirus. This is giving payrolls a lift.

The strong employment report showed that the economy fully rebounded in the second quarter. Furthermore, economic growth this year is likely to be around 7%, which would be the fastest since 1984.

The labour market’s health will weigh heavily on the Fed’s next monetary policy decisions.

soaring infections of COVID-19 could keep workers at home and hamper hiring

However, analysts say that surging COVID-19 infections, driven by the Delta variant of the coronavirus, pose a risk. As we know, nearly half of the population have already received two doses of vaccine. Therefore, analysts say that major disruptions to economic activity are not anticipated. However, they say that soaring infections could keep workers at home and hamper hiring.

Moreover, it’s essential to mention that a lack of workers has left employers unable to fill a record 9.2 million job openings. Furthermore, the shortage of affordable child care and concerns of contracting the COVID-19 have been blamed for keeping workers, mostly women, at home.

The worker shortage is likely to ease in the fall as schools reopens for in-person learning. However, some economists are less optimistic, arguing that the economy created many low skilled jobs and there were not enough people to take them.