Payrolls increase 943,000 in July as the unemployment rate slides to 5.4%

August 9, 2021: -Hiring rose in July at its fastest pace in nearly a year despite fears over the Covid-19′s delta variant. As companies struggled with a strict labor supply, the Labor Department reported on Friday.Nonfarm payrolls grew by 943,000 for the month while the unemployment rate decreased to 5.4%, according to the department’s Bureau of Labor Statistics. The payrolls increase was the best from August 2020.

Economists surveyed by Dow Jones looked for 845,000 new jobs and a headline unemployment rate of 5.7%. Although, estimates were diverse amid conflicting headwinds and tailwinds and an uncertain path following the economy.

Average earnings per hour also increased above the expectations, rising 0.4% for the month and are now 4% from the same period before a year, at a time when concerns are growing about persistent inflationary pressures.

“The data for last months suggest that the increasing demand for the labor associated with the recovery from the pandemic may have put upward pressure on wages,” the BLS said. However, it cautioned that the Covid impact is still skewing data, and wages are uneven in the industries.

Markets are hitting positively to the report, with the Dow and S&P 500 reached new record highs open on Friday.

“It feels like a Goldilocks report. You have not too hot in terms of wages, but not too low in terms of job gains,” said Beth Ann Bovino, chief U.S. economist at S&P Global Ratings.

The drop in the headline unemployment rate looked even more vital considering that the labor force participation rate ticked up to 61.7%, tied for the high level from the pandemic that began in March 2020. A separate calculation including discouraged workers and those holding jobs part-time for economic reasons fell even further, to 9.2% from 9.8% in June.

“This not only was a strong jobs report by nearly every measure, but it also signals more good things to come,” said Robert Frick, corporate economist at Navy Federal Credit Union.

As has been the case for the past several months, leisure and hospitality led job creation, adding 380,000 positions, of which 253,000 came in bars and restaurants. The sector took the hardest hit during the pandemic but showed consistent gains during the economic reopening.

The unemployment rate for leisure and hospitality tumbled to 9% in July from 10.9% in June and compared to 25% a year earlier. Wages in the sector rose 1.2% month over month and are up 3.1% from a year earlier. However, there are still about 1.8 million fewer workers than before the pandemic.

Education also showed substantial gains, with 261,000 new hires. However, the BLS cautioned that the pandemic has distorted the sector’s numbers and likely elevated the number for July.