by Calculated Risk on 8/06/2021 09:16:00 AM

The headline jobs number in the July employment report was slightly above expectations, and employment for the previous two months was revised up significantly.   The participation rate increased slightly and the unemployment rate decreased sharply to 5.4%.

Leisure and hospitality gained 380 thousand jobs.  In March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 1.7 million jobs since February 2020.  So leisure and hospitality has now added back almost 79% of the jobs lost in March and April 2020.

Construction employment increased 11 thousand in June, and manufacturing added 27 thousand jobs.

NOTE: State and Local education added 231 thousand jobs, seasonally adjusted.  But this is a seasonal quirk - there were actually 962 thousand education jobs lost in July NSA, but that was fewer than normal for July - since fewer teachers were hired last year (and possibly an increase in summer teaching employment) - so seasonally adjusted this showed a gain.

Earlier: July Employment Report: 943 Thousand Jobs, 5.4% Unemployment Rate

In July, the year-over-year employment change was 7.255 million jobs. This turned positive in April due to the sharp jobs losses in April 2020.

Permanent Job Losers

Click on graph for larger image.

This graph shows permanent job losers as a percent of the pre-recession peak in employment through the report today. (ht Joe Weisenthal at Bloomberg).

This data is only available back to 1994, so there is only data for three recessions.

In July, the number of permanent job losers decreased to 2.930 million from 3.187 million in June.

These jobs will likely be the hardest to recover.

Prime (25 to 54 Years Old) Participation

Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The prime working age will be key as the economy recovers.

The 25 to 54 participation rate increased in July to 81.8% from 81.7% in June, and the 25 to 54 employment population ratio increased to 77.8% from 77.2% in June.

Part Time for Economic Reasons

From the BLS report:

"In July, the number of persons employed part time for economic reasons, at 4.5 million, was about unchanged. There were 4.4 million persons in this category in February 2020. 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."

The number of persons working part time for economic reasons decreased in July to 4.483 million from 4.627 million in June. This is back close to pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 9.2% from 9.8% in June. This is down from the record high in April 22.9% for this measure since 1994. This measure was at 7.0% in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 3.425 million workers who have been unemployed for more than 26 weeks and still want a job, down from 3.985 million in June.

This does not include all the people that left the labor force. This will be a key measure to follow during the recovery.

Summary:

The headline monthly jobs number was slightly above expectations, and the previous two months were revised up by 119,000 combined.  And the headline unemployment rate decreased to 5.4%.

There are still 5.7 million fewer jobs than prior to the recession, but overall this was a strong report.