Though the U.S. economy is in much better shape now than it was at the start of the pandemic — when unemployment reached a record high and millions of jobless claims were logged each week — it still has a ways to go. In fact, over the past several weeks, new jobless claims have come in higher than analysts’ expectations. At the same time, job creation has been below expectations, which is not a good thing at all.
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Private sector jobs fell short
In July, private sector employers added 330,000 new jobs, according to payroll firm ADP. But that’s far below the 680,000 new positions added in June. It’s also well below the 653,000 new jobs economists predicted.
Not only did private sector job growth fall short in July, but it was the smallest gain since February. And that means we could still be a long way off from a complete economic recovery.
Industries that added the most jobs
Some industries added more jobs than others in July. Here’s where most of that job activity occurred:
- Leisure and hospitality: 139,000 new jobs
- Education and health services: 64,000 new jobs
- Professional and business services: 36,000 new jobs
By contrast, the construction industry added a mere 1,000 new positions in June. That could explain why new homes are taking so long to build.
From an employer size standpoint, companies with 50 to 499 employees added 132,000 jobs in July. Larger companies added 106,000 new positions.
What this means for the economy
July’s numbers are a letdown in the context of an economic recovery. The fact that only 330,000 new jobs were added at a time when analysts were expecting almost twice that means we’ve hit yet another roadblock. And the Delta variant surge could be the reason why.
Companies may be hesitant to add jobs while pandemic restrictions are back on the table. And if more jobs are shed in the coming weeks due to those restrictions, we could see the greater economic situation deteriorate rapidly.
This doesn’t mean we’ll start seeing unemployment numbers like those from April or May of 2020. But it does mean the economy may take a few steps back before moving forward.
Now, all of this begs the question — if things get worse, will Americans see a fourth stimulus check hit their bank accounts?
It’s too soon to say. If jobs numbers continue to disappoint and the unemployment rate starts consistently ticking upward, it could make the case for a fourth stimulus round. But we’ll have to see how the situation plays out over the next few months before we can speculate about another direct payment.
Meanwhile, boosted unemployment benefits are set to expire at the beginning of September. So far, 26 states have attempted to pull that boost early. But if the unemployment situation gets worse, it’ll be interesting to see whether that Labor Day deadline gets extended.
View more information: https://www.fool.com/the-ascent/personal-finance/articles/private-companies-added-330000-jobs-in-july-short-of-the-653000-expected/