The unemployment rate dropped from 11.1% in June to 10.2% in July, as the economy added nearly 1.8 million jobs last month, soundly beating consensus estimates. Equities futures and the dollar gained on the news.
That marks a third straight month of solid hiring and a falling jobless rate after it topped out at 14.7% in April—the highest level since 1940.
This points to an economy that continues to rebound since states began easing lockdowns. The 10.2% unemployment rate, while still weak, comes in far better than the 10.6% consensus estimates of economists compiled by Bloomberg. The improvement will be good news for the White House, but it’s clear it will take years before the U.S. Labor market returns to pre-pandemic levels.
The U.S. Bureau of Labor Statistics (BLS) jobs report finds the total number of unemployed Americans stood at 16.3 million in July, much improved from the 23.1 million unemployed in April. But the number of Americans out of work is still around three times greater than the February figure (when 5.8 million were unemployed), and indicates the much-hoped-for V-shaped recovery is far from likely.
Jobless Americans were receiving an extra $600 weekly in unemployment benefits from the federal government. That benefit expired, however, without a replacement the week ending July 25.
Congress has yet to come to an agreement for extending or replacing the 600-buck supplement, which paid its final benefit for the week ending July 25. Democratic and Republican party leaders are making little progress in their talks for another stimulus package, and enhanced unemployment benefits are among the most disputed negotiating points in the bill. Democrats want the $600 benefit extended through the end of the year, while Republicans want it scaled back, arguing that it’s so generous it’s deterring the jobless from seeking work.
The July jobs numbers also show the economic slump is still hitting some communities harder than others. The jobless rate among white workers is 9.2%, compared with 12% for Asian workers, 12.9% for Hispanic workers, and 14.6% among Black workers. Among adult men, the rate is 9.4%, compared to 10.5% among adult women.
While the number of unemployed Americans is going down, the number of “permanently” unemployed Americans remained at 2.9 million in July. That number had risen in May and June as employers converted some of their furloughs into layoffs—something that could impede the recovery.
This official unemployment rate of 10.2% is likely undercounting the actual level of joblessness from July. The BLS defines the unemployed as people without jobs who are also looking for new positions. So laid-off workers who are receiving unemployment benefits but aren’t looking for a job, aren’t considered unemployed.
The report highlights other abnormalities in the labor market. For example, in July, the BLS found that 16.3 million Americans were unemployed. However, U.S. Department of Labor data finds 30.5 million were receiving the $600 enhanced unemployment benefit before it expired in July.