US hiring slows due to delta variant

America’s employers added just 235,000 jobs in August, a surprisingly weak gain after two months of robust hiring and the clearest sign to date that the Delta variant’s spread has discouraged some people from flying, shopping, and eating out.

The August job growth the government reported Friday fell far short of the sizeable gains of roughly one million in each of the previous two months.

The hiring jumps in June and July had followed widespread vaccinations that allowed the economy to fully reopen from pandemic restrictions. Now, with Americans buying fewer plane tickets, reducing hotel stays, and filling fewer entertainment venues, some employers in those areas have slowed their hiring.

Still, the number of job openings remains at record levels, with many employers still eager for workers, and overall hiring is expected to stay solid in the coming months. Even with August’s tepid job gain, the unemployment rate dropped to 5.2 per cent from 5.4 per cent in July. With many consumers still willing to spend and companies to hire, the overall United States economy still looks healthy.

The details in Friday’s jobs report showed, though, how the Delta variant held back job growth last month. The sectors of the economy where hiring was weakest were mainly those that require face-to-face contact with the public. More Americans said they were unable to work in August because their employer closed or lost business to the pandemic than said so in July.

“The Delta variant has taken a bigger toll on the job market than many of us had hoped,” said Sarah House, a senior economist at Wells Fargo. “It’s going to take workers longer to come back to the labour market than we expected.”

The August jobs report “slams the door” on the prospect of the US Federal Reserve announcing a pullback when it meets later this month, said House. Fed Chair Jerome Powell made clear last week that the central bank would begin to reverse its ultra-low-rate policies later this year if the economy continued to improve.

Hiring in a category that includes restaurants, bars, and hotels sank to zero in August after those sectors had added roughly 400,000 jobs in both June and July.

Healthcare and government employers also cut jobs in August. Construction companies, which have struggled to find workers, lost 3,000 jobs despite strong demand for new homes.

Government employers shed 8,000 jobs, mostly because of a sharp decline in local education hiring after strong gains in June and July.

AP