The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for July 2021 on Friday, August 6th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market. The results mark 17 months since the Covid-19 economic lockdown. While the results are impressive, hurdles lie ahead with the Covid-19 variant leading some states and localities to reinstate some restrictions on activity.
Employment in the U.S. rose by 943,000 jobs, well above the Geographic Solutions, Inc. forecast of 689,000. The WSJ Economist Survey forecasted new jobs to be 845,000. The major surprise came from employment in Local Government Education which grew by 220,700, the largest increase on record since tracking began in 1955. July is typically a low point for jobs in local education, so the BLS typically adjusts it upwards to seasonalize the data. That appears not to have happened this year, perhaps due to educators being called back into work earlier than usual to prepare for school openings under Covid-19 or an expansion of summer programs. The Geographic Solutions forecast was derived from internal data on the number of job openings, job severances, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast used unemployment claims data from the U.S. Department of Labor (USDOL).
The unemployment rate dropped to 5.4%, below the Geographic Solutions forecast of 6.1% and the WSJ forecast of 5.7%. The unemployment rate forecast used internal data on job openings, job searchers, job severances, and the number of applications for unemployment benefits filed on Geographic Solutions state client sites. The forecast used unemployment claims data from the USDOL.
Job creation was most pronounced in Leisure & Hospitality (+380,000), the largest driver of new employment for several months even as restaurants and hotels struggle to fill job openings. Job market gains also came from a strong performance in Government that totaled 240,000 new jobs mostly from Local Government Education as already discussed.
Leisure & Hospitality employment continues its climb, but it has a long way to go before completing its recovery. Its employment remains a little more than 10% below February 2020. No other major industry has employment more than 6% below its February 2020 total.
The U-3 unemployment rate is the standard form of measuring unemployment in the U.S. labor market and includes those that are actively seeking a job but unable to find one. The U-3 unemployment rate declined to 5.4% from the previous month.
The labor force participation rate ticked up to 61.7% from the previous month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment fell 0.6% to 9.2%. All indicators are showing that July was a great month for the U.S. labor market.
The July labor market report is about as good as could be reasonably expected. Yet, this news may be dismissed, because of the emergence of the delta variant which mostly happened after the surveys were conducted. While this will have a diminishing effect on the economy, especially in places that will bring back Covid-19 limitations, the overall labor market should see a healthy expansion for the next few months. It will be much needed as the U.S. still has 5.7 million fewer jobs than before the pandemic began in February 2020.