The Jobs Recovery Slowed in July: A Recap of the July 2020 Jobs Report

The labor market’s recovery slowed in July 2020 as rising COVID-19 cases delayed the resumption of business as usual. 

Here are six things to know about the jobs report released on August 7, 2020: 

The recovery in payroll employment kept chugging along but at a slower pace.

1. • Payroll employment rose by 1.76 million in July, with gains beating expectations but falling well short of June’s more robust 4.79 million bounceback. 
   • The largest job gains were in leisure and hospitality (+592k, vs. +2.1 million in June) and retail trade (+258k, vs. +740k in June). But as many cities and states paused their reopenings to fight back surges in COVID-19 cases, businesses were forced to slow the pace at which they recalled workers.

Several industries continued to shed jobs.

1. • Performing arts and spectator sports lost 12.8K jobs as fall and winter season events were cancelled or pared back. That industry now employs fewer than half as many as it did last year (253.7K vs. 514.2K). State mass layoff notices for July read like a list of the nation’s top orchestras, theaters, opera houses, and sporting venues. 
   • Several high-wage industries where jobs can be performed from home nevertheless continued to struggle as businesses sought to defray pandemic-related revenue losses. For example, employment declines continued in management of companies and enterprises (-12.2K), advertising and related services (-8.2K), computer systems design (-7K), and publishing industries (-6.9K). 
   • Employment in support activities for mining (-10.6k) also continued to contract, as anemic global demand thwarted a recovery in commodity prices.  

The labor force shrank as some workers retired early or became discouraged.

1. • The labor force shrank by 62K and the labor force participation rate ticked downwards from 61.5% to 61.4%. 
   • There are several signs that the pandemic has reduced Americans’ attachment to the labor force, with thousands of workers accepting early retirement packages and many others moving onto the sidelines until conditions improve. 
   • The number of discouraged workers—those who want a job now but have given up looking—continues to increase. During the Great Recession, that number rose almost five-fold over the course of three years as the experience of job loss and difficulty finding work caused considerable scarring. It has already more than doubled in five months.    

The labor market is still in a very deep hole.

1. • The unemployment rate fell to 10.2% from 11.1% in June, as the number of unemployed persons fell by 1.4 million to 16.3 million. But the unemployment rate is still worse than at the peak of the Great Recession. 
   • As of July, payroll employment was lower than its pre-COVID February level by 12.9 million jobs (or 8.4%). In other words, the pandemic has sent the economy back to 2014-level numbers of jobs.
   • Before the pandemic, the economy was on pace to add about 1 million jobs between February and July, so its toll on the economy’s trajectory is even larger than the topline numbers suggest. 
   • Payroll employment now needs to grow by about 2.6 million per month to recover by the end of the year—a possibility which seems increasingly remote given the persistence of the pandemic. 

There were some unexpected bright spots in the household survey.

1. • Many observers expected the number of Americans who are unemployed due to permanent job loss to increase due to elevated numbers of new layoffs and the conversion of many temporary layoffs into permanent layoffs. 
   • Instead, the number of unemployed due to permanent job loss ticked down ever so slightly remaining in the ballpark of 2.9 million and the number of unemployed due to temporary layoff fell by 1.3 million to 9.2 million.  
   • The number of people working part-time for economic reasons fell by 579K. That suggests many of the workers who had their hours cut at the start of the pandemic are returning to full-time employment.

Some industries continued to build on recent pandemic-related job gains.

1. • Employment at couriers and messengers (+9.2K) continued to grow in July. That industry has now added 69.1K jobs since February as increased e-commerce sales have buoyed demand for delivery services. 
   • Building material and garden supply stores (+8.7K) also continued to ramp up hiring. That industry has added 62.6K jobs since February as families sheltering in place have invested in improving their homes and gardens.

Since the week of July 12 when surveys for the July report were conducted, the growth in job postings on ZipRecruiter has accelerated substantially week over week and COVID-19 cases have started falling again. Both indicators could point to better days ahead and more rapid job growth in the August jobs report.