The recovering US economy scored a big jobs gain in July, according to government data Friday, as hard-hit industries continued to return to normal, even as the Delta variant of the coronavirus casts doubts on the outlook.
The 943,000 new jobs added last month was shy of the one million gain some economists had been expecting, but enough to push the unemployment rate down a half a point to 5.4 percent, the Labor Department reported.
With widespread vaccination allowing the world's largest economy to return to normal, hiring has begun to accelerate, but the economy remains 5.7 million jobs short of its pre-pandemic level.
But the gain in June was revised sharply higher than the original report, to show an increase of 938,000 non-farm payroll positions, seasonally adjusted, and the result for May was also revised up.
With restaurants, bars and hotels opening their doors, notable gains in hiring in July came in the leisure and hospitality sector, which increased 380,000, the report said.
And with schools set to reopen to in-person classes, public education rose 220,000.
But economists cautioned that the solid trend of the past two months could be derailed if more restrictions are imposed to contain the rising Covid-19 infections, or if schools are unable to reopen.
"The highly contagious Delta variant casts a shadow on the labor market recovery in the coming months, threatening to slow the return of workers still on the sideline due to childcare issues or health concerns," Kathy Bostjancic of Oxford Economics said in an analysis.
Improvement for Black workers
For Black workers, the jobless rate fell a full point from the prior month to 8.2 percent, although that came amid a worrying decline in labor force participation, which points to more people giving up on looking for a job.
That remains far higher than the 4.8 percent unemployment for white workers and 6.6 percent for Hispanics, the data showed.
In another sign the labor market has not fully recovered, there were 4.5 million people working part time because they cannot find full time work, the report said.
The broadest measure of joblessness, which include those who want to work but have given up looking, fell again but remains at 9.2 percent.
Even with many people on the sidelines, companies continue to report struggles finding workers to fill open positions.
That shortage has been acute in the construction industry, which added just 11,000 positions, while manufacturing rose by 27,000.
The labor shortage also is driving wages higher, and average hourly earnings nationwide jumped 11 cents to $30.54, the report said.
The struggle to find workers as businesses reopen has become a political issue, with Republicans blaming the generous federal jobless benefits as keeping potential hires on the sidelines.
Nearly two dozen state governments have terminated supplemental unemployment benefits early, but they are set to expire nationwide in September, which has prompted many economists to predict hiring will accelerate in the fall months.
Rubeela Farooqi of High Frequency Economics said "expiration of unemployment benefits combined with ongoing vaccinations should result in an easing of supply shortages."