U.S. Economy Added 235K Jobs in August, Falling Nearly 500K Short of Expectations

What’s the story?

• The Bureau of Labor Statistics (BLS) on Friday released its jobs report for August 2021, which found the U.S. economy added 235,000 jobs and the unemployment declined by 0.2 percentage points to 5.2%. The report falls short of the Dow Jones forecast.
• The report comes after about 1 million jobs were added in each of the last two months, and means the U.S. economy has recovered about 75% of jobs lost during the pandemic with 5.3 million left to be regained.

Jobs Report Sector Breakdown

• Professional and business services added 74,000 jobs, with the largest gains in architectural and engineering services (+19,000) and computer systems design (+10,000). The sector is down 468,000 jobs compared to February 2020.
• Transportation and warehousing added 53,000 jobs, which brings the sector slightly above (+22,000) its pre-pandemic level in February 2020.
• Manufacturing added 37,000 jobs in August and is 378,000 jobs below its February 2020 level.
• Employment in the leisure and hospitality sector was relatively unchanged in August after increasing by an average of 350,000 per month for the last six months. Gains in arts, entertainment, and recreation (+36,000) were more than offset by losses in food and drinking places (-42,000). Employment in the sector is 1.7 million jobs (or 10%) below its February 2020 level.
• Retail employment declined by 29,000 jobs in August, with losses in food and beverage stores (-23,000) and in building material and garden supply stores (-13,000). The retail sector is down 285,000 jobs compared to February 2020.

Long-Term Unemployment

• The number of Americans considered to be long-term unemployed (defined as jobless for 27 weeks or more) decreased by 246,000 in August to 3.2 million. 
• The number of long-term unemployed is 2.1 million higher than in February 2020. Long-term unemployed accounted for 37.4% of the total unemployed in August.

Demographic Unemployment Information

• Unemployment rates declined for adult men (to 5.1% from 5.4% in July), adult women (4.8% from 5.0% in July), and increased among teenagers (11.2% from 9.6% in July).
• Unemployment rates declined among whites (4.5% from 4.8% in July), Hispanics (to 6.4% from 6.6% in July), Asians (to 4.6% from 5.3% in July), and increased among blacks (to 8.8% from 8.2% in July).

Revisions & Data Notes

• Employment in June was revised up by 24,000 from +938,000 to +968,000.
• Employment in July was revised up by 110,000 from +943,000 to +1,053,000.
• 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 August 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 / gorodenkoff)