U.S. added 943,000 jobs in July; unemployment rate at 5.4%

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Hiring surged in July as American employers added 943,000 jobs. The unemployment rate dropped to 5.4% as the U.S. economy continues to bounce back with surprising vigor from last year’s coronavirus shutdown.

The July numbers exceeded economists’ forecast for more than 860,000 new jobs. Hotels and restaurants, reopening and doing brisk business, added 327,000 jobs last month. Local public schools added 221,000.

The number of people who reported they had jobs surged by 1 million, pushing the jobless rate down from 5.9% in June.

Despite an uptick in COVID-19 cases and a shortage of available workers, the U.S. economy likely enjoyed a burst of job growth last month as it bounced back with surprising vigor from last year’s coronavirus shutdown.

The coronavirus triggered a brief but intense recession last spring, forcing businesses to shut down and consumers to stay home as a health precaution. The economy lost more than 22 million jobs in March and April 2020. Since then, though, it has recovered nearly 16 million jobs, leaving a 6.8 million shortfall compared to February 2020.

The rollout of vaccines has encouraged businesses to reopen and consumers to return to shops, restaurants and bars that they had shunned for months after the pandemic struck. Many Americans are also in surprisingly strong financial shape because the lockdowns allowed them to save money and bank relief checks from the federal government.

As a result, the economy has bounded back with unexpected speed. The International Monetary Fund expects U.S. gross domestic product — the broadest measure of economic output — to grow 7% this year, its fastest pace since 1984.

Employers are advertising jobs — a record 9.2 million openings in May — faster than applicants can fill them.

Some businesses blame generous federal unemployment benefits — including an extra $300 a week tacked on to regular state jobless aid — for discouraging Americans from seeking work. In response, many states have dropped the federal unemployment assistance even before it is scheduled to expire nationwide Sept. 6.

Many Americans may be staying out of the job market because of lingering health fears and trouble obtaining childcare at a time when many schools are closed.

Another problem: Many of those thrown out of work by the coronavirus recession can’t go back to their old jobs.

Rubeela Farooqi, chief U.S. economist at High Frequency Economics, notes, for instance, that about 80,000 restaurants have closed since March 2020. So those displaced workers must find new employers and often new careers.

“Matching the unemployed to job openings will likely be a more prolonged process, given that finding a new job, perhaps in a new industry, will be a challenge,” Farooqi wrote in a research report.

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Republished with permission from The Associated Press.