The Latest Unemployment Report: Slow and Steady Improvement
Last Friday, the Bureau of Labor Statistics (BLS) released its latest Employment Situation Summary. Experts had anticipated 1.58 million jobs added in July and an unemployment rate of 10.5%. The official report showed 1.8 million jobs added and an unemployment rate of 10.2%, down from 11.1% last month—marking the third consecutive month of improvement.
However, full recovery is still ahead. The Wall Street Journal notes:
“July’s payroll growth, at 1.8 million, still leaves total payrolls 12.9 million lower than in February. If job gains continued at July’s pace, that deficit could be erased by March 2021. Reclaiming the last peak in 13 months would be remarkably fast compared to the six years it took after the last recession.”
Permanent vs. Temporary Unemployment
During a pandemic, it is crucial to distinguish temporary from permanent job losses. Morgan Stanley economists observed:
“The rate of churn in the labor market remains incredibly high, but a notable positive detail is the downtick in the rate of new permanent layoffs.”
The core unemployment rate focuses on permanent job losses by excluding temporary layoffs and including those not recently searching for work. Jed Kolko, Chief Economist at Indeed, reported:
“Core unemployment fell in July for the first time in the pandemic. That's the good news I was hoping for.”
What about the housing market?
The housing market continues to show resilience. Robert Dietz, Chief Economist for the NAHB, noted:
“Housing continues to rebound in another positive labor market report. Home builder and remodeler job gains of 24K for July. Residential construction employment down just 56.4K compared to a year ago. Total residential construction employment at 2.85 million.”
Bottom Line
While optimism should remain measured, the recent job gains are encouraging. Mike Fratantoni, Chief Economist for the Mortgage Bankers Association, reminds us:
“The pace of job growth slowed in July, but the gains over the past three months represent an impressive rebound during the ongoing economic challenges brought forth by the pandemic.”
