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Financial News: U.S. Job Growth Slows But Unemployment Rate Drops

U.S. Job Growth Slows But Unemployment Rate Drops More Than Expected

09/04/2020 - 09:47:00 (RTTNews)

(RTTNews) - A closely watched report released by the Labor Department on Friday showed another substantial increase in U.S. employment in the month of August, although the pace of job growth continued to slow from the record spike seen in June.

The Labor Department said non-farm payroll employment surged up by 1.371 million jobs in August after spiking by a downwardly revised 1.734 million jobs in July and soaring by 4.781 million jobs in June.

Economists had expected employment to jump by about 1.400 million jobs compared to the addition of 1.763 million jobs originally reported for the previous month.

The strong job growth in August was partly due to the hiring of 238,000 temporary 2020 Census workers, which contributed to a significant increase in government employment.

"Census hiring could rise further in September but, as in previous Census years, those workers will be let go again over the following months," said Andrew Hunter, Senior U.S. Economist at Capital Economics. "Nevertheless, there were also solid increases in employment across most of the private sector."

The Labor Department cited notable job growth in retail trade, professional and business services, leisure and hospitality, and education and health services.

The continued job growth contributed to a much bigger than expected drop in the unemployment rate, which fell to 8.4 percent in August from 10.2 percent in July. Economists had expected the unemployment rate to edge down to 9.8 percent.

The notable decrease in the unemployment rate came as the household survey found employment spiked by 3.756 million in August, far outpacing a 968,000 person increase in the size of the labor force.

The unemployment rate continued to decline from the post-World War II record high of 13.5 percent in April but remains well above the 50-year low of 3.5 percent seen late last year.

Meanwhile, the report said average hourly employee earnings rose $0.11 or 0.4 percent to $29.47 in August from $29.36 in July. Annual wage growth was unchanged at 4.7 percent.

"Employment growth is still set to lag the recovery in broader economic activity over the coming months given its greater exposure to the services sectors worst affected by the pandemic," Hunter said.

He added, "Nevertheless, the August data illustrate that, despite the earlier surge in virus cases and more recent fading of fiscal support, the recovery continues to plough on."

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