Strong job growth in July but economic impact of Delta remains unclear

Employers in the U.S. added 943,000 jobs to payrolls in July 2021, according to new data from the Bureau of Labor Statistics (BLS). This was on the higher end of projections by economists and represents strong levels of economic growth. BLS also revised estimates from June 2021 from 850,000 jobs to 938,000. With this new data, the U.S. economy has recovered approximately 75 percent of the 22 million jobs lost in the first months of the pandemic. 

“While we still have a ways to go to get back to pre-pandemic levels, the July jobs numbers are welcome news,” said Kentucky Chamber Senior Policy Analyst Charles Aull. “They reflect the high demand and productivity that we have seen in recent GDP growth and the hard work of employers to hire and bring back jobs.”

Sectors that led payroll growth in July include leisure and hospitality, local government education, and professional and business services. The hard-hit leisure and hospitality sector grew by 380,000 jobs. Strong growth in “local government education” – which generally refers to public P-12 education – may have been an anomaly, according to BLS, caused by staffing fluctuations brought on by the pandemic. 

The monthly jobs report includes the results of two surveys conducted by the U.S. Census Bureau and Bureau of Labor Statistics (BLS): the household survey, which looks at the labor force, and the establishment survey, which looks at employment and payroll.

There are two important caveats that business leaders and policymakers should be mindful of when interpreting the July jobs report.

First, this data was collected before the rise in Covid-19 cases caused by the Delta variant. Case rates began accelerating in the second half of July. Much of the survey data from the July jobs report was collected earlier in the month. As a result, the full impact of Delta on the economy remains to be seen. 

Second, the percentage of U.S. adults who participate in the workforce was roughly the same as it was in June at 61.7 percent, just 0.1 percentage points higher than last month. This metric calculates the percent of the adult population ages 16+ who have a job or are actively looking for a job. Prior to the pandemic, the workforce participation rate was 63.3 percent. This number has remained stubbornly flat since last summer, reflecting an unwillingness or inability to seek on the part of many individuals to find work. Weak workforce participation has been a characteristic of the economic recovery and has made it harder for employers to fill open positions and keep up with demand. July’s number suggests this trend is continuing, despite the employers’ success in adding almost 1 million jobs to payroll.

“Bringing people back into the workforce has been a challenge throughout the economic recovery, but addressing this issue will help put Kentucky and the nation on a strong footing as we continue rebuilding the economy,” said Aull. “This is a problem that the Chamber is actively studying and is committed to solving.”

Data on job and employment levels in Kentucky will be released later this month.