In what has been termed a blockbuster, the US Department of Labor released its monthly jobs report for July and revealed that American employers had added 943,000 nonfarm payroll jobs, far exceeding the earlier ADP report of 330,00 from private employers, and while Labor and ADP use a different methodology, most observers, economists, and, of course, the White House, were ecstatic.
Many are saying that this is the post pandemic swing that they were waiting for,and it also serves to silence, in part, Biden Administration critics who have openly carped that the rising inflation was attributable to increased spending, and of course, those stimulus checks.
Conversely while the report shows that the Biden policies are working, a little GOP carping goes a long way, for its base.
It also takes the heat off Federal Reserve chair, Jerome Powell, to diminish stockpiling bonds and securities in its reserves, as the increased job activity creates less of a vacuum.
It should be noted that while the goods news was welcome, it was gathered as is standard, from data collected in the first two weeks of June, and does not show the effects of the Delta Variant, that has coursed through some parts of the country, creating havoc on local economies, as they grapple with prevention strategies.
Acknowledging this, President Biden said, “we will doubtless have ups and downs along the way as we continue to battle the Delta surge of Covid,”but added, “What is indisputable now is the Biden plan is working, the Biden plan produces and results ,and the Biden plan is moving the country forward.”
Gus Faucher, chief economist at PNC Financial Services in Pittsburgh, told The New York Times, “This is a great report, very solid in terms of job growth and the decline in the unemployment rate.”
Showing the way forward was the continued growth in leisure and hospitality, where one third of the gains were, (due to increased vaccinations), as public consumption transferred from goods to be enjoyed at home, to services and activities outside the home; and, to prove the point restaurants and bars last month added 253,000 jobs, and as airline travel increased, hotels and resorts added 74,000, while entertainment and recreation added 53,000 jobs.
Coming as a surprise to some was the increase of 221,000 public school jobs that some see as a harbinger of the much hoped for September increase of office workers returning from remote work, at home, to school children doing the same.
The figures, “could be inflated by seasonal adjustments and the way COVID 19 upends hiring cycles,” reported The Hill, and school openings in the Fall could be affected by a number of issues, such as the presence, or absence, of mask mandates, as local leaders grapple whether to have staff and faculty fully vaccinated.
Heralding the good news also included the increase of employment of racial minorities, with Blacks seeing an increase to 9.2 percent from 8.2 in June.
Black workers, reported CNBC, “represent about 13% of the US labor force, but 21% of all workers in transportation and warehousing,[while] Hispanic workers are 17% of the labor force, but comprise 24% in the leisure and hospitality industry.”
It’s not hard to see how this translates to wages, and they increased “with average hourly earnings increased by 11 cents in July and 4 percent year over year,” added The Hill.
A closer look at wages shows a gross disparity,”when comparing the wages of white men to women across demographic categories. White women make 19% less, Black women nearly 40% less, Hispanic women 43% less, and Asian women make 7% less,” CNBC concluded from their research.
Economists have stressed that since people of color were overly affected by the economic disaster, brought by the pandmeic, any subsequent gains are proportional
Overall, the labor force participation rate was nearly the same at 0.8%, but there were some surprises, with manufacturing and construction showing modest increases, and still bearing the brunt of,”hidden goods process and a shortage of components like semiconductors,” surmised the Times.
In contrast the Institute for Supply Management showed accelerated growth both for June and July, 60.1 in June and 64.1 in July; and, which had shown some alleviation in earlier months and the growth supports Powell’s assertion that the bottlenecks in supply and demand would ease.
Just before Labor released its report, “Timothy Fiore, chair of ISM's manufacturing business survey committee, noted that "supply and demand dynamics appear to be moving closer to equilibrium for the first time in many months." Part of that could be because spending is rotating back to services from goods, added Reuters.
Manufacturing accounts for 11.9% of the US economy.
Overall the US has 9.2 new job openings with 9.5 million people still unemployed. And, in that vein there are still many employers desperate for employees, and even professional slots are still open, baffling the former.
Some, mainly GOP leaders, have stated that extended unemployment benefits are the fault, yet, as we have seen, in many areas, while not all service people are looking for a change; for some, those benefits provided a cushion for those looking for better wages, working conditions, or location.
Statistics are near nil for benefits as the culprit, for as Barrons recently noted, “70% of people with benefits live in states that haven’t yet cut the additional payments.”
While July provided blockbuster numbers, all eyes seem to be on September for a real change in jobs and consumer behavior, but that remains an open question.
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