U.S. Economy Gains 1.4 Million Jobs in August, Unemployment Rate Drops to 8.4%

What’s the story?

• The Bureau of Labor Statistics (BLS) on Friday released its jobs report for August 2020, which found that the U.S. economy added 1.37 million jobs in August and the unemployment rate fell to 8.4%, a decline of 1.8 percentage points. The number of jobs added in August beat Dow Jones estimates of 1.32 million jobs. 
• The August jobs report makes it four consecutive months of larger than expected job gains and builds on the previous gains of 2.7 million in May, 4.8 million in June, and 1.8 million in July ― each of which surpassed the prior historical record for monthly jobs added (1.1 million in September 1983).
• The economy lost 22.2 million jobs in March and April due to lockdown measures initiated to slow the spread of COVID-19, so the four month run of job gains represents about 48% of those that were lost and leaves the economy 11.5 million jobs below its February level.

Jobs Report Sector Breakdown

• Government employment increased by 344,000 in August, with 251,000 of those in the federal government driven by the hiring of 238,000 temporary 2020 Census workers, and 95,000 local government job gains. Overall, government employment is 831,000 below its February level.
• Retail added 249,000 jobs in August, with gains in general merchandise (+116,000), motor vehicle and parts dealers (+22,000), and electronics and appliance stores (+21,000). Overall employment in retail is 655,000 jobs lower than in February.
• Professional and business services gained 197,000 jobs in August, with over half of the gain in temporary help service (+107,000). Employment in the sector is 1.5 million below its February level.
• Education and health services added 147,000 jobs in August with the largest gains in private education (+57,000), and the offices of physicians (+27,000) and dentists (+22,000). Nursing and residential care facilities saw employment decline by 14,000 jobs. The sector overall is 1.5 million jobs below its February level.
• Transportation and warehousing added 78,000 jobs in August, and employment in the sector is 381,000 jobs below its February level.
• Manufacturing employment rose by 29,000 jobs in August, but employment in the sector is still 720,000 jobs below February’s level.

Demographic Unemployment Information

• Unemployment rates declined for adult men (8% from 9.4% in July), adult women (8.4% from 10.5% in July), and teenagers (16.1% from 19.3% in July).
• Unemployment rates also declined among whites (7.3% from 9.2% in July), blacks (13% from 14.6% in July), Hispanics (10.5% from 12.9% in July), and Asians (10.7% from 12% in July).

Revisions & Data Notes

• Employment in June was revised down by 10,000 jobs from a gain of 4,791,000 to 4,781,000.
• Employment in July was revised down by 29,000 jobs from a gain of 1,763,000 to 1,734,000.
• The BLS noted that the degree of misclassification declined in July 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 0.7% 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 / valentinrussanov)