Economy Adds 943K Jobs in July, Unemployment Rate Drops to 5.4%

What’s the story?

• The Bureau of Labor Statistics (BLS) on Friday released its jobs report for July 2021, which found the U.S. economy added 943,000 jobs and the unemployment rate declined by 0.5 percentage points to 5.4%. The report exceeds the Dow Jones forecast of 845,000 jobs and a 5.7% unemployment rate.

Jobs Report Sector Breakdown

• Leisure and hospitality employment increased by 380,000, two-thirds of which occurred in food services and drinking places (+253,000), followed by accommodation (+74,000) and arts, entertainment, and recreation (+53,000). Overall, employment in the sector is down by 1.7 million or 10.3% from its February 2020 level.
• Education saw an increase of 221,000 in local government education and 40,000 in private education. Staffing fluctuations during the pandemic have altered the typical seasonal patterns of layoffs and hiring, and with fewer layoffs at the end of the school year, it results in job gains after seasonal adjustment. Compared to February 2020, local government education employment is down 205,000 jobs while private education is down 207,000.
• Professional and business services added 60,000 jobs in July and much of that was focused in the professional and technical services component (+43,000). Across the sector, employment is down by 556,000 jobs relative to February 2020.
• Transportation and warehousing added 50,000 jobs in July, with the largest gains in transportation and ground passenger transportation (+19,000) and warehousing and storage (+11,000). The sector is 575,000 jobs below its February 2020 level.
• Healthcare added 37,000 jobs, with gains in ambulatory healthcare (+32,000) and hospitals (+18,000) offset by a loss of 13,000 jobs in nursing and residential care facilities. Employment in the sector is 502,000 jobs beneath its February 2020 level.
• Manufacturing added 27,000 jobs, mostly in durable goods including machinery (+7,000) and miscellaneous durable goods (+6,000). Employment in the sector is 433,000 jobs below its February 2020 level.
• Retail lost 6,000 jobs in July, with gains in gas stations (+14,000), miscellaneous store retailers (+7,000), and nonstore retailers (+5,000) more than offset by job losses at building material and garden supply stores (-34,000). The sector overall is down 270,000 jobs from its February 2020 level.

Long-Term Unemployment

• The number of Americans considered to be long-term unemployed (defined as jobless for 27 weeks or more) decreased by 560,000 in July to a total of 3.4 million. 
• The number of long-term unemployed is 2.3 million higher than in February 2020. Long-term unemployed accounted for 39.3% of all unemployed in July.

Demographic Unemployment Information

• Unemployment rates declined for adult men (to 5.4% from 5.9% in June), adult women (5.0% from 5.5% in June), and teenagers (9.6% from 9.9% in June).
• Unemployment rates declined among Whites (4.8% from 5.2% in June), Blacks (to 8.2% from 9.2% in June), Hispanics (to 6.6% from 7.4% in June), and Asians (to 5.3% from 5.8% in June).

Revisions & Data Notes

• Employment in May was revised up by 31,000 from +583,000 to +614,000.
• Employment in June was revised up by 88,000 from +850,000 to +938,000.
• As it has since March 2020, the BLS published an estimate of what the unemployment rate would have been had misclassified workers been included. 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.
• Using this approach, the July unemployment rate would have been 0.3 percentage points higher than reported. The BLS notes that this represents the upper bound of their 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 / lechatnoir)