The U.S. economy added 1.763 million jobs in July, bringing the unemployment rate down to 10.2 percent and reflecting the continued resumption of economic activity after COVID-19 shutdowns.
While a better-than-expected number, July’s job gains fell far short of June’s 4.8 million increase and May’s 2.7 million gain, and indicates that only around 40 percent of the jobs lost due to pandemic-driven shutdowns have come back. It also reflects a slowing dynamic in the labor market recovery last month amid rising cases of COVID-19 infections in parts of the country.
“The steam has gone out of the engine and the economy is beginning to slow,” said Sung Won Sohn, a finance and economics professor at Loyola Marymount University in Los Angeles. “The loss of momentum will continue and my concern is that the combination of the virus resurgence and lack of action by Congress could really push employment into negative territory.”
The Labor Department report showed that the sectors that saw the largest gains were leisure and hospitality, followed by retail trade, government, professional and business services, and education and health care.
A report on Thursday from global outplacement firm Challenger, Gray & Christmas showed job cuts announced by U.S. employers surged 54 percent to 262,649 in July compared to the previous month. Hiring announcements totaled 246,507 last month, almost matching the layoffs.
Many economists have said the tens of millions of unemployed workers underscores the need for another aid package. The White House and Congress are working on the next wave of relief, with negotiations seeking to strike a balance between a sweeping $3.5 trillion package proposed by Democrats and a $1 trillion cap sought by Republicans.