In the past few months, the U.S. economy has been showing signs of a strong economic recovery from the initial shock caused by the Covid-19 pandemic, with many of the jobs reports surpassing economists’ expectations. However, it seems this recovery process has run into a major roadblock.
According to the latest report from the Bureau of Labor Statistics, the U.S. economy added just 235,000 new jobs. This is the lowest number since January and fell far short of expectations. Initially, economists predicted that there would be around 728,000 new jobs added.
In total, the U.S. economy remains 5.3 million jobs short of where it was in February of 2020. 5.6 million people also reported that they couldn’t find work or had to work reduced hours due to the pandemic impacting their employers. Still, the unemployment rate fell from 5.4% to 5.2%, and July job gains were revised to over 1 million, the first gain of a million or more jobs since August 2020.
As for what sectors posted the largest gains, professional and business services, transportation and warehousing, private education, and manufacturing all had the newest jobs. Leisure and hospitality, which posted big gains in the past few months, remained relatively unchanged, while restaurants and bars saw a loss of 42,000 jobs.
This is mainly due to the growing concerns over the Delta variant of Covid-19. As many cities and states are starting to reintroduce restrictions in order to limit the spread of the new variant, people are putting their travel plans on hold once again, stalling the leisure and hospitality sector. This also means fewer people are going out to eat or drink, hurting the still-battered restaurant and bars. There are also concerns that the Delta variant could disrupt school reopening, which would mean many parents would need to stay home with their kids instead of returning to work.