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US Economy Adds 900,000 Jobs, Unemployment Falls To 5.4% During The Month of July

Job growth in the US rose in July at its fastest pace in nearly a year despite fears over the Coronavirus Delta variant and a tightening labor supply, the Labor Department reported on August 6. Nonfarm payrolls increased by 943,000 for the month while the Unemployment rate dropped to 5.4%, according to the Bureau of Labor Statistics. The payroll increase was the best since August 2020. Most economists expected 845,000 new jobs and a headline unemployment rate of 5.7% for July, thus the overall jobs gains exceeded their expectations. However, estimates were diverse amid conflicting headwinds and tailwinds and an uncertain path ahead for the economy. Additionally, average hourly earnings also increased more than expected, rising 0.4% for the month and are up 4% from the same period a year ago, at a time when concerns are increasing about persistent inflationary pressures. “The data for recent months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages,” the BLS said in the report, though it cautioned that the Coronavirus impact is still skewing data and wage gains are uneven across industries.

The drop in the US unemployment rate looked even stronger considering that the labor force participation rate ticked up to 61.7%, tied for the highest level since the pandemic hit in March 2020. A separate calculation that includes discouraged workers and those holding jobs part-time for economic reasons fell even further, to 9.2% from 9.8% in June. As has been the case for the past several months, leisure and hospitality led job creation, adding 380,000 positions, of which 253,000 came in bars and restaurants. The sector took the hardest hit during the pandemic but showed consistent gains during the economic reopening.

The July jobs numbers come amid a surge of new Coronavirus cases in the US and around the world, with the most severe illnesses happening in states with larger unvaccinated populations such as Alabama, Louisiana, Florida, Texas, and Missouri. The increase has raised fears that it could slow economic activity in a recovery that began in April 2020 and has shown resilience despite the periodic flareups of Covid cases. At the same time, the US is fighting a continuing battle with a scarcity of labor. Job placement site Indeed estimated there were 9.8 million job openings as of July 16, far more than the 8.7 million considered unemployed. In a survey of 5,000 job seekers, however, the amount of those citing health concerns as a reason for not looking for a job declined, with a growing number citing a lack of need due to a financial cushion as the top response.

Since the Coronavirus pandemic began in March of 2020, the US unemployment rate has remained elevated, peaking at 14.8% in April of 2020. Though the unemployment rate has tumbled roughly 9% since the pandemic began, it remains well above the 3.5% prior to the crisis. Federal Reserve policymakers have vowed to keep ultra-easy monetary policy in place until they see stronger signs of full employment, though that may risk higher inflation in the long term. Overall, the improving economic picture in the US shows that the economic policies implemented by the Biden Administration are working as intended and will allow the US to emerge from the Coronavirus pandemic in a relatively strong position. 

Matthew Rose
Matt studies and analyzes politics at all levels. He is the creator of, a scholarly resource exploring political trends, political theory, political economy, philosophy, and more. He hopes that his articles can encourage more people to gain knowledge about politics and understand the impact that public policy decisions have on their lives. Matt is also involved in the preservation of recorded sound through IASA International Bibliography of Discographies, and is an avid record collector.


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