U.S. Economy Gains 1.8 Million Jobs in July, Unemployment Rate Drops to 10.2%

What’s the story?

• The Bureau of Labor Statistics (BLS) on Friday released its jobs report for July 2020, which found that the U.S. economy added 1.8 million jobs in July and the unemployment rate fell to 10.2%, a 0.9 percentage point decline. The number of jobs added in July beat a Dow Jones forecast of 1.48 million jobs. 
• July’s jobs report is the third consecutive month of larger than expected gains and builds on the 2.7 million jobs added in May and the 4.8 million jobs added in June ― both of which broke the previous historical record for monthly jobs added (1.1 million in September 1983). 
• The economy lost 22.2 million jobs in March & April due to lockdown measures aimed at slowing the spread of the coronavirus (COVID-19), so the three month run of 9.3 million job gains represent about 42% of those that were lost.

Jobs Report Sector Breakdown

• Leisure & hospitality employment increased by 592,000 in July and accounted for about one-third of the total employment gain. Employment in food services & drinking places rose by 502,000; although it is still down about 2.6 million jobs since February.
• Government employment rose by 301,000 in July but is 1.1 million below its February level. The pandemic-altered school year contributed to an earlier than usual decline in public-sector education jobs, so July saw an unusually large gain of 215,000 public education jobs.
• Retail added 258,000 jobs and is 913,000 lower than in February, with much of the gains focused in clothing stores (+121,000).
• Professional & business services gained 170,000 jobs in July, but remain 1.6 million below its February level.
• Healthcare added 126,000 jobs, with growth focused in offices of dentists (+45,000), hospitals (+27,000), offices of physicians (+26,000), and home healthcare services (+16,000).
• Manufacturing employment increased by 26,000 in July, a level that’s 740,000 lower than in February.

Demographic Unemployment Information

• Unemployment rates declined in July for adult men (9.4% from 10.2% in June), adult women (10.5% from 11.2% in June), and teenagers (19.3% from 23.2% in June).
• Unemployment rates also declined among whites (9.2% from 10.1% in June), blacks (14.6% from 15.4% in June), Hispanics (12.9% from 14.5% in June), and Asians (12% from 13.8% in June).

Revisions & Data Notes

• Employment in May was revised up by 26,000 jobs from a gain of 2,699,000 jobs to 2,725,000 jobs.
• Employment in June was revised down by 9,000 jobs from a gain of 4,800,000 jobs to 4,791,000 jobs.
• The BLS noted that the degree of misclassification declined in June was much smaller than in prior months. The misclassification hinges on a question about the main reason people were absent from their jobs, with people absent due to temporary, pandemic-related closures recorded as absent due to “other reasons” as opposed to unemployed due to temporary layoff. 
• If those workers classified as absent due to “other reasons” had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 1% higher than reported, but BLS notes that this “represents the upper bound of our estimate of misclassification and probably overstates the size of the misclassification error.”
• According to usual practice at the BLS, data is accepted as recorded in the household survey. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.

— Eric Revell

(Photo Credit: iStock.com / martin-dm)