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Jobs Numbers Improving…But Will the Trend Continue?

Posted September 10, 2020 by Bill Walker

We have to find glimmers of hope where we can lately, and the most recent jobs report is no exception. In August, the U.S economy added 1.4 million jobs — an impressive sounding figure — but the truth of the matter is that we are still at a deficit as compared to pre-COVID-19 numbers. 

The unemployment rate fell from 10.2 percent in July to 8.4 percent in August, meaning many Americans have been able to find jobs. State’s reopening their economies over the summer contributed to this increase in jobs numbers. But there are also many millions who are looking for work and still unable to secure employment. 

For comparison sake, the unemployment rate was at just 3.5 percent in February, pre-pandemic, but considering the unemployment rate hit nearly 15 percent in April, August’s data shows we are on the right track. However, the economy still has about 11.5 million fewer jobs today than in February.

Hard-hit industries beginning to rebound

Looking more closely at which industries contributed to the increase in jobs in August, we see that the leaders were among those hardest hit early on in the pandemic.

Retail

Retail gained 248,900 jobs (seasonally adjusted) between July and August, bringing the total of people employed in that sector to 15,016,600. Among the biggest winners were department stores, warehouse clubs, and supercenters (general merchandise), which added 116,400 jobs in August, bringing their total employees to 3,218,300, which is actually ahead of their August 2019 employment numbers (3,018,900). 

Building material and garden supply stores have weathered the pandemic storm quite well and added jobs each month for the past quarter, putting their employment ahead of where it was in August 2019. Between July and August, the industry added 13,200 jobs, bringing their August 2020 total to 1,388,800 employees as compared to 1,301,900 a year ago.

Clothing and accessories stores are beginning to rebound. They had been hard-hit by layoffs during the height of the pandemic in the spring, and while they are still struggling to attain 2019 numbers, they did add 11,100 jobs in August for a total of 916,900 in that industry. However, compared to August of 2019, when 1,293,800 were employed in that vertical, they still have ground to make up.

Leisure and hospitality

Few sectors were more impacted by pandemic-related closures than this one, though they are starting a gradual rally thanks to summertime hiring and states reopening. Overall, leisure and hospitality added 174,000 jobs from July to August, for a total of 12,728,000, however compared to August of 2019 when this vertical employed 16,570,000, there is still ample room for improvement.

Jobs in the performing arts and spectator sports are still down by roughly half compared to August 2019 (276,200 vs. 513,600). In the hotel industry, year-over-year jobs are also way down — 1,310,500 in August of this year as compared to 2,079,000 last August, though they have been inching up each month in the past quarter.

Looking at restaurants and bars — another industry heavily impacted by quarantine restrictions — 133,600 jobs were added in August. While this number is impressive, they still have a way to go to reach pre-pandemic employment numbers and demand. In August of 2020, restaurants and bars employed 9,815,100, but in August of 2019, that niche had 12,069,500 employees. 

Government

August’s data reveals a mixed bag for government jobs. Federal jobs saw a hearty increase, thanks in large part to census-related hiring. The federal government added 251,000 jobs in August for a total of 3,163,000 employees, actually surpassing the number of jobs in August of 2019 (2,857,000).

State governments, on the other hand, saw a slight decline in jobs, largely due to budget cuts related to declines in tax revenue. Jobs in education were primarily impacted, losing 3,900 jobs in August, though year-over-year, the total number of education jobs is nearly flat (2,489,300 in August 2019 vs. 2,284,500 in August 2020). 

Autumn of uncertainty

The economy still faces some headwinds with several large companies warning of future cuts. Commercial airlines, for example, have been hemorrhaging money as travel restrictions remain in place and consumers continue to be reluctant to travel. United Airlines has said they plan to cut over 16,000 staff.

But on the whole, the August jobs report is reason for cautious optimism as the economy continues a gradual rebound for the springtime jobs crater. With concerns about a resurgence of the virus this fall as schools reopen, as well as the tandem start of flu season, we shall see if this upward hiring trend will continue.

You can learn more about how these and other industries have been impacted by COVID-19 by visiting our free COVID-19 webpage.

Tags: banking, economy, advisor, industry intelligence, COVID-19, jobs report, unemployment

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