The US economy added 943,000 jobs in July as the unemployment rate fell to 5.4%, the Bureau of Labor Statistics according to Friday's July jobs report. This would mark the biggest rise in jobs in 12 months, when an unexpected surge of over 1 million new roles were added as the country saw optimism as Covid-19 cases dipped and businesses began to reopen.

June jobs were revised upwards to 938,000, nearly matching July's pace.

In additional positive news:

• An increase in employment-to-population ratio to 58.4% (up 0.4%)
• Significant drop in the number of Americans unemployed for longer than 6 months, down by 560,000
• Wage growth grew by 4%

According to Indeed Hiring Lab: no major industry sector has gotten back to its pre-pandemic employment level. Leisure and hospitality is still down 10% compared to its February 2020 level. Overall, the US is still down roughly 8.6 million jobs from where it would have been absent the pandemic.

Ending Extended Unemployment Benefits Does Not Seem to be the Driver

Interestingly, according to an analysis by UKG, a payroll and time-management firm, shifts among hourly workers in states that ended extended unemployment benefits grew 2.2% from May through July; they grew 4.1% in the others that kept federal aid intact, according to the analysis.

“Unemployment benefits were not the thing holding people back from going to work,” according to Dave Gilbertson, a vice president at UKG. “There are other elements out there, particularly in their personal lives, making it really difficult to go back to work.”

Employment fell by a weak 0.9% in states that ended federal benefits between mid-June and mid-July, but rose 2.3% in states that kept them, according to data published this week by Homebase, another payroll and time-management firm.

Some Signs of Concern Remain

California, Texas, and Florida - states which are arguably the largest drivers of the US labor market - are seeing rises in the Delta variant. Florida's hospitalization rate is now at its highest level since the start of the pandemic, with little signs of slowing. Considering how much these states - particularly Florida - rely on leisure and hospitality for employment, anything which impacts those sectors will drag the numbers back down.

More than a third of July's job gains came from the leisure and hospitality sector as Americans continued to shift their spending away from goods and toward experiences. Restaurants and bars added 253,000 jobs, hotels and resorts added 74,000 jobs and arts, entertainment and recreation added 53,000.

August hiring could be affected by the Delta variant-fueled rise in Covid-19 cases, and officials at the Fed will surely want to see those numbers first before taking any action.

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