U.S. Adds 1.8 Million Jobs In July, Unemployment Rate Falls

THE EMPLOYMENT SITUATION — JULY 2020

Total nonfarm payroll employment rose by 1.8 million in July, and the unemployment rate fell to 10.2 percent, the U.S. Bureau of Labor Statistics reported today.

These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it.

In July, notable job gains occurred in leisure and hospitality, government, retail trade, professional and business services, other services, and health care.

This presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics.

The establishment survey measures nonfarm employment, hours, and earnings by industry.

The change in total nonfarm payroll employment for May was revised up by 26,000, from +2,699,000 to +2,725,000, and the change for June was revised down by 9,000, from +4,800,000 to +4,791,000.

With these revisions, employment in May and June combined was 17,000 higher than previously reported.

Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.

In July, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $29.39, following large changes in recent months.

The average hourly earnings of private-sector production and nonsupervisory employees decreased by 11 cents to $24.63 in July.

The large employment fluctuations–especially in lower-paid industries–over the past several months complicate the analysis of recent trends in average hourly earnings.

Household Survey Data

In July, the unemployment rate declined by 0.9 percentage point to 10.2 percent, and the number of unemployed persons fell by 1.4 million to 16.3 million.

Despite declines over the past 3 months, these measures are up by 6.7 percentage points and 10.6 million, respectively, since February.

Among the major worker groups, the unemployment rates declined in July for:

• adult men (9.4 percent),
• adult women (10.5 percent),
• teenagers (19.3 percent),
• Whites (9.2 percent),
• Asians (12.0 percent),
• Hispanics (12.9 percent) and,
• Blacks (14.6 percent) (showed little change over the month)

The number of unemployed persons who were on temporary layoff decreased by 1.3 million in July to 9.2 million, about half its April level.

In July, the number of permanent job losers and the number of unemployed reentrants to the labor force were virtually unchanged over the month, at 2.9 million and 2.4 million, respectively. (Reentrants are persons who previously worked but were not in the labor force prior to beginning their job search.)

Among the unemployed, those who were jobless less than 5 weeks increased by 364,000 to 3.2 million in July, and the number of persons jobless 15 to 26 weeks rose by 4.6 million to 6.5 million.

By contrast, the number of unemployed persons who were jobless 5 to 14 weeks fell by 6.3 million to 5.2 million. The number of long-term unemployed (those jobless for 27 weeks or more), at 1.5 million, was little changed over the month.

The labor force participation rate, at 61.4 percent, changed little in July, following increases in May and June.

Total employment, as measured by the household survey, rose by 1.4 million in July to 143.5 million. The employment-population ratio rose by 0.5 percentage points to 55.1 percent but remains lower than in February (61.1 percent).

In July, the number of persons who usually work part-time rose by 803,000 to 24.0 million, while the number who usually work full time, at 119.5 million, was little changed.

The number of persons employed part-time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 619,000 to 8.4 million in July, reflecting a decline in the number of people whose hours were cut due to slack work or business conditions (-658,000).

The number of involuntary part-time workers is 4.1 million higher than in February.

These individuals, who would have preferred full-time employment, were working part-time because their hours had been reduced or they were unable to find full- time jobs. This group includes persons who usually work full time and persons who usually work part-time.

In July, the number of persons not in the labor force who currently want a job declined by 463,000 to 7.7 million; this measure is 2.8 million higher than in February.

These individuals were not counted as unemployed because they were not actively looking for work during the last 4 weeks or were unavailable to take a job.

Among those not in the labor force who currently want a job, persons marginally attached to the labor force fell by 492,000 to 2.0 million in July.

These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey.

Discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, numbered 665,000 in July, essentially unchanged from the previous month.

Establishment Survey Data

Total nonfarm payroll employment rose by 1.8 million in July, less than the increase of 4.8 million in June and 2.7 million in May.

In July, nonfarm employment was lower than its February level by 12.9 million, or 8.4 percent.

The largest employment increases in July occurred in leisure and hospitality, government, retail trade, professional and business services, other services, and health care.

Employment in leisure and hospitality increased by 592,000, accounting for about one-third of the gain in total nonfarm employment in July.

Employment in food services and drinking places rose by 502,000, following gains of 2.9 million in May and June combined. Despite the gains over the last 3 months, employment in food services and drinking places is down by 2.6 million since February.

Over the month, employment also rose in amusements, gambling, and recreation (+100,000).

Government employment rose by 301,000 in July but is 1.1 million below its February level. Typically, public-sector education employment declines in July.

However, employment declines occurred earlier than usual this year due to the pandemic, resulting in unusually large July increases in local government education (+215,000) and state government education (+30,000) after seasonal adjustment.

A July job gain in federal government (+27,000) reflected the hiring of temporary workers for the 2020 Census.

In July, retail trade added 258,000 jobs. Employment in the industry is 913,000 lower than in February. For July, early half of the job gain in retail trade occurred in clothing and clothing accessories stores (+121,000). By contrast, the component of general merchandise stores that includes warehouse clubs and supercenters lost jobs (-64,000).

Employment in professional and business services increased in July (+170,000) but remains 1.6 million below its February level. The majority of July’s gain occurred in temporary help services (+144,000).

In July, the other services industry added 149,000 jobs, with most of the increase occurring in personal and laundry services (+119,000). Since February, employment in other services is down by 627,000.

In July, health care added 126,000 jobs, with employment growth in offices of dentists (+45,000), hospitals (+27,000), offices of physicians (+26,000), and home health care services (+16,000). Job losses continued in nursing and residential care facilities (-28,000). Employment in health care is down by 797,000 since February.

July, employment in social assistance increased by 66,000, with child daycare services accounting for most of the gain (+45,000). Employment in social assistance is 460,000 lower than in February.

Employment in transportation and warehousing rose by 38,000 in July, following an increase of 87,000 in June. Despite job gains over the past 2 months, employment in the industry is down by 470,000 since a recent peak in January.

In July, employment rose in transit and ground passenger transportation (+20,000), air transportation (+16,000), and couriers and messengers (+9,000).

Manufacturing employment increased by 26,000 in July. An employment gain in motor vehicles and parts (+39,000) was partially offset by losses in fabricated metal products (-11,000), machinery (-7,000), and computer and electronic products (-6,000).

Although manufacturing has added 623,000 jobs over the past 3 months, employment is 740,000 lower than in February.

Financial activities added 21,000 jobs in July, with most of the gain in real estate and rental and leasing (+15,000). Since February, employment in financial activities is down by 216,000.

In July, construction employment changed little (+20,000), following job gains of 619,000 in May and June combined. However, employment in the industry remains 444,000 below its February level.

Mining continued to shed jobs in July (-7,000), reflecting a loss in support activities for mining (-11,000). Mining has lost 127,000 jobs since a recent peak in January 2019, although nearly three-fourths of this decline has occurred since February 2020.

The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hours to 34.5 hours in July.

In manufacturing, the workweek rose by 0.7 hours to 39.7 hours, and overtime increased by 0.3 hours to 2.8 hours.

The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 34.0 hours.