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August's grim slowdown in hiring just knocked America's full economic recovery back 2 months - to April 2022

Sep 3, 2021, 21:20 IST
Business Insider
A man wearing a mask walks past a "now hiring" sign on Melrose Avenue amid the coronavirus pandemic on April 22, 2021 in Los Angeles, California. Alexi Rosenfeld/Getty Images
  • The August jobs report was so bad it added two months to the projected economic recovery.
  • The US won't return to pre-crisis employment levels until April 2022, Insider calculated.
  • Soaring Delta cases and possible weak hiring in key sectors this fall could delay the recovery even further.
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US employers slammed the brakes on hiring last month. That has massive ramifications for the broader economic recovery.

The US added just 235,000 payrolls in August, according to data published Friday. That's less than a third of the 733,000 jobs expected and the weakest month of job growth since January.

It also marks a massive slowdown from the promising growth seen just one month prior. July job creation was revised higher to 1.1 million, and June's was also lifted to 962,000 new jobs. The deceleration in monthly job growth was so sharp, it added two months to the projections of when the US will reach pre-pandemic employment, according to Insider calculations.

Using the three-month moving average for US payroll growth, the jobs recovery is now expected to arrive in April 2022. By comparison, July's stellar report shortened the projected recovery by four months, to land on February 2022.

The August report alone paints an even bleaker picture of the future.

If last month's pace of hiring continues into the fall, it will take nearly two more years to return to the employment levels seen in February 2020.

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And the full-recovery forecast only places payrolls at the highs seen before the pandemic. Job growth was trending at roughly 200,000 new payrolls per month before the crisis. The labor market is down roughly 5.3 million jobs from pre-pandemic levels, but returning to the early 2020 trend will require adding some 8.7 million jobs, Insider calculated.

Signs point to job creation floundering in the coming months.

The August report's survey period ended halfway through last month, and virus cases have only risen in the weeks since. With the health situation worsening, subpar September data is likely in the cards, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said.

"This is just the start of the Delta hit," he added. "September likely will be weak too, and we're becoming nervous about the prospects for a decent revival in October, given that behavior lags cases, and cases are yet to peak."

An even harsher Delta wave stands to further slam the sectors that were previously leading the jobs recovery. Hiring was flat in the leisure and hospitality sector in August after average monthly gains of 350,000 payrolls the previous six months. Restaurants and bars shed 42,000 payrolls, and retailers lost 29,000 jobs.

Those sectors were the hardest hit by the pandemic's onset last year, and the August report suggests the Delta wave is powering yet another slump.

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