August 10, 2020

Unemployment rate sees slowdown in July

jobsThe U.S. economy exceeded expectations by adding 1.8 million jobs in July. NAFCU Chief Economist and Vice President of Research Curt Long – in a new NAFCU Macro Data Flash report - credited the sharp slowdown to inaction on a new fiscal stimulus package and school closures.

"Prior months saw sharp increases in permanent job losses, but that was halted last month at a still-lofty 2.9 million," said Long. "Roughly 40 percent of the overall drop in employment from February to April has now been recovered, but that still leaves 15 million workers on the sidelines."

"It will take a long time to get back to those levels of employment, but the good news is that the labor market is demonstrating that it can continue to heal even at a time (mid-July) when COVID cases were growing," Long added.

Average hourly earnings rose 7 cents in July, driven by higher-wage workers returning to the job market. Of note, the May and June employment numbers were revised upward by 26,000 and downward by 9,000 jobs, respectively.

The labor force participation rate slipped to 61.4 percent, still significantly down from 63.4 percent in February. Leisure and hospitality continued to lead the way, recovering 592,000 jobs, followed by government (+301,000), retail trade (+258,300), and education and health services (+215,000).

"Consumer sentiment declined in July despite the job gains, and lower consumer demand will pose a more traditional headwind for the economy," Long concluded. "NAFCU expects job gains over the coming months to be positive but slower."