U.S. employers added 943,000 jobs in July, marking the largest number in almost a year and the second straight month of significant increases after 938,000 jobs were gained in June. The number, which was in large part driven by the leisure and hospitality sector, was higher than economists expected and marked the largest rise in jobs since August 2020.
The decline in the unemployment rate to 5.4 percent from 5.9 percent in June was also greater than had been forecast. The two straight months of almost one million new jobs each gives fresh optimism to those who have been predicting that vaccination would lead the economy to soar. “This is an unambiguously positive report,” said Mark M. Zandi, chief economist of Moody’s Analytics. “It’s consistent with a booming economy, and economy that’s roaring back from the pandemic recession.”
Even as analysts celebrated the Friday jobs report, many were also careful to strike a note of caution. The surveys for the jobs report were conducted in the middle of July, meaning before there was a sharp increase in cases of COVID-19 across the country driven by the highly contagious delta variant. A growing number of local governments started imposing new mask mandates and restrictions to combat the increases at the end of July, meaning their effect could be evident in the next jobs report.
There’s little evidence to suggest that the increasing cases will significantly affect the resurgent U.S. economy, in large part due to the fact that nearly half the population is fully vaccinated. At the same time though, rising cases could keep more workers at home and push companies to delay any planned hiring. “The jobs recovery is continuing, but it’s different in character to any we’ve seen before,” Nela Richardson, economist at human-resources software firm Automatic Data Processing, tells the Wall Street Journal. “I had been looking at September as a point when we could gain momentum—with schools back in session and vaccines widely available. But with the Delta variant, we need to rethink that.”
The economy has now recovered nearly 17 million jobs since May of last year, but there is still a 5.7 million shortfall compared to February 2020. Employers have been unable to fill a record 9.2 million job openings.