July 2021 Jobs Report: Employers Add 943,000 to Payrolls

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The American economy roared into midsummer with a strong gain in hiring, overcoming trouble in matching workers with openings, as the recovery appeared to take firmer hold.

Employers added 943,000 jobs in July, the Labor Department reported Friday, with restaurants and bars leading the way. It was the best monthly performance in nearly a year, and it was accompanied by a sharp drop in the unemployment rate to 5.4 percent, the lowest since the pandemic began, from 5.9 percent.

One cloud loomed over the buoyant numbers: The data was collected in the first half of last month, before the Delta variant of the coronavirus exploded in many parts of the country. Experts warn that a sustained outbreak could pose a threat to industries just regaining their footing.

Nevertheless, after sizable jumps in employment in May and June, July’s showing reinforced the case that the recovery is proceeding, helped by healthy consumer spending, trillions of dollars in government support and a pickup in business investment.

“Doubtlessly we’ll have ups and downs along the way as we continue to battle the Delta surge of Covid,” Mr. Biden said. “What is indisputable now is this: The Biden plan is working, the Biden plan produces results, and the Biden plan is moving the country forward.”

With upward revisions of the figures for May and June, nearly 2.5 million jobs have been added in the last three months, putting the economy three-quarters of the way toward restoring the 22.4 million positions wiped out at the pandemic’s start.

“Business is unbelievable,” said Tom Gimbel, chief executive of LaSalle Network, a recruiting and staffing firm in Chicago. “It shows me that companies are very optimistic.”

Leisure and hospitality businesses, which were devastated last year as bars and restaurants closed, were the biggest contributors to July’s hiring, adding 380,000 to their payrolls. That included 253,000 positions in food and drinking establishments, along with jobs in lodging and in arts, entertainment and recreation.

Unusually for a summer month, July also produced a substantial increase in education jobs. Instead of letting teachers go as they had in the past, schools kept more workers on the payroll, elevating the seasonally adjusted numbers.

Local governments added 221,000 education jobs, after a jump in June, and private institutions tacked on 40,000.

Manufacturing and construction showed more modest increases, hampered by higher prices for goods and a shortage of components like semiconductors. Retail jobs declined slightly after two months of big gains. But employment in professional and business services jumped by 60,000, a sign that the white-collar sector is on the upswing.

“Companies are continuing to hire salespeople in numbers that I’ve never seen,” said Mr. Gimbel of LaSalle Network. “The huge demand is entry to midlevel, with salaries ranging from $45,000 to $90,000. It’s the rebirth of the middle manager.”

For much of the year, companies have reported challenges in filling openings as they tried to keep up with consumer demand and rebuild their staffs — an anomaly in a labor market still far from full employment.

“You have to make twice as many calls to find candidates,” said Carmen Smith, chief people officer at Coyote Logistics, a Chicago subsidiary of UPS. “The talent market is very tight.”

Ms. Smith said Coyote brought aboard 100 new employees in July and plans to add 300 later this year, primarily in sales, operations, marketing, and finance. “We’re going into our busiest season, and business looks strong,” she added.

There is turbulence on the horizon. Events including the New York International Auto Show, which was to have opened later this month in Manhattan, have recently been canceled. Mask requirements have been reintroduced indoors in many areas as well.

Should restrictions on dining return, or schools close again, these sectors would be hard hit. A downturn in hiring travel is likely, too, should cases spike further.

“If Delta becomes a concern, it will likely constrain spending and activity and potentially hiring in all of the same service sectors,” said Mr. Gapen, the Barclays economist. “It does present some downside risk.”

Profit returned to prepandemic levels at Poor Boy Lloyd’s restaurant in Baton Rouge, La., as downtown offices filled up again after a year of remote work, the owner, Fred Taylor, said. In fact, Mr. Taylor had trouble keeping up with the resurgence in customers while being short staffed.

But in the last week, he said, he had lost nearly 75 percent of his usual sales as Delta variant cases multiplied in the area.

Uncertainty about the course of the virus is making it hard to know how much to invest in hiring and training more workers, Mr. Taylor said.

“It’s hard to operate with a fluctuating income,” he said. “The costs are going to be higher. The electricity is going to be the same, the rent is going to be the same, and you don’t have the money to pay it.”

Jeanna Smialek, Coral Murphy Marcos and Katie Rogers contributed reporting.

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