US economy beats forecasts, adds 1.37 million jobs in August as unemployment tumbles to 8.4%
Shannon Stapleton/Reuters
- The US Bureau of Labor Statistics on Friday said the US added 1.37 million jobs in August. That slightly exceeded the 1.35 million payroll additions expected by economists surveyed by Bloomberg.
- It marks the fourth straight month of job additions as the economy tries to claw back from a coronavirus-induced recession. The US saw record job losses in April.
- The BLS also said the US unemployment rate was 8.4% in August, down from 10.2% in July.
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The US economy added jobs for the fourth straight month in August as the labor market tries to recover from a historically sharp downturn.
American businesses added 1.37 million nonfarm payrolls during the month, according to the Bureau of Labor Statistics. That slightly exceeded the 1.35 million payroll additions expected by economists surveyed by Bloomberg.
The US unemployment rate came in at 8.4%, the BLS said, far lower than the 10.2% expected by economists. April's 14.7% reading was the highest since the Great Depression of the 1930s.
The report provides the latest snapshot of the labor-market recovery following the pandemic-induced recession.
"These jobs numbers reflect a big win for American workers, and are a welcome surprise considering the unemployment insurance claims have barely been budging in recent weeks," said Robert Frick, corporate economist at Navy Federal Credit Union. "Unemployment breaking the 10% barrier so decisively is a big psychological lift as well."
Inside the numbers
The Bureau of Labor Statistics noted that the headline employment number in August was boosted by temporary workers for the US Census, which hired 238,000 temporary workers during the reference week for the nonfarm payrolls report.
The August report also included supplemental data added to gauge the impact of the coronavirus pandemic on employment. The share of workers that telecommuted during the month declined to 24.3% from 26.4% in July.
In addition, 24.2 million people in August said they were unable to work in the last four weeks because their employer "closed or lost business due to the pandemic," down from 31.3 million in July, according to the report. Of these people, 11.6% said they received at least some pay from their employers.
The number of people that said the coronavirus pandemic prevented them from seeking employment also ticked down during August to 5.2 million, from 6.5 million in July.
While the report showed that the labor market recovery pushed forward in August, it also showed signs of underlying weakness in the economy. During the month, the amount of permanent job losers rose by 534,000 to 3.4 million.
Economists worry that people who permanently lose their jobs will have a harder time finding employment again, delaying the recovery. The number of permanent job losers has increased by 2.1 million since February.
At the same time, the number of workers on temporary layoff decreased by 3.1 million in August to a total of 6.2 million. While still elevated, it's much below the record-high seen in April, the worst month of job losses amid the pandemic.
Some of the sectors hit hardest by the pandemic gained jobs back during August, including retail trade, professional and business services, leisure and hospitality, and education and health services. Still, total nonfarm employment is 11.5 million or 7.6% below the pre-pandemic level in February.
Looking for government signals
Americans have been waiting for further signs that the government will provide additional stimulus to aid the economic recovery and workers who have been laid off due to the virus. So far, Democrats and Republicans remain deadlocked in negotiations.
In the meantime, aid to out-of-work Americans and businesses has expired. At the end of July, the additional $600 weekly unemployment benefit ended, slashing income for millions of Americans.
In August, President Donald Trump signed an executive order extending an extra $300 per week in federal benefits with the option for states to provide an additional $100. While the program has been approved in 40 states, it may last only a few weeks.
Also in August, the Small Business Association's Payroll Protection Program ended. The lending program gave fully forgivable loans to small businesses that used them to keep workers on the payroll.
The trajectory of the economic recovery is becoming increasingly important as the 2020 presidential election draws near. Trump, who often touted the strong economy before the pandemic, is lagging behind Democratic nominee Joe Biden in polls.
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