The Line: Swing and a Huge Miss

Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts.

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The BLS—my old employer—reported Friday that just 235,000 jobs were added in August, well below the 720,000 economists surveyed by Dow Jones were expecting.

That’s almost as disappointing as the Mets have been since the All-Star break. The 235,000 increase is the weakest figure since January, and comes after over 2 million jobs were added the prior two months. The Delta variant played a big roll in the tempered growth, as the retail sector lost 29,000 jobs last month. Leisure and hospitality employment was unchanged, after adding an average of 350,000 jobs per month over the prior 6 months. Even so, this number is really a bummer when you consider that the latest JOLTS report showed the U.S. had a record 10.1 million job openings at the end of June. We also found out last week that both initial and continuing jobless claims have fallen to pandemic-era lows. Any good news in the report? The unemployment rate fell from 5.4% to 5.2%, for what that’s worth. The bottom line? Many will attribute the weak job growth last month to the Delta variant, but the inability of employers to fill open positions remains a huge drag on this data. Ever try to go out to eat on a Monday? So many restaurants in my town are closing on Mondays because they can’t hire enough staff to stay open. The $300 per week federal unemployment benefit ended Saturday, but I wouldn’t expect any big boost to hiring just yet. Many states that left the program early have yet to see any significant increase in job growth. Expect more push from Democrats for their $3.5 trillion budget resolution, as some will interpret one bad month as a sign the recovery is weakening. While the Delta variant remains a serious threat to our recovery, I have faith that the economy still headed in the right direction. Job growth has been incredibly volatile over the past year, but the important thing to remember is the U.S. has added over 7.6 million jobs during that time. Subscribe here to receive The Line in your inbox.