By Jeffry Bartash, MarketWatch
The numbers: The U.S. regained 1.4 million jobs in August and the unemployment rate posted a surprisingly large drop to 8.4%, suggesting an economic recovery is still plowing ahead even if the pace of growth has slowed since the start of the summer.
The increase in hiring last month exceeded Wall Street’s forecast. Economists polled by MarketWatch had forecast a 1.2 million gain. U.S. stocks fell in Friday trades.
The employment picture was a bit softer after stripping out the hiring of 238,000 temporary Census workers and those who work in public education.
Private-sector hiring rose by 1 million, down from 1.48 million in July, the government said Friday.
The most positive news was a big reduction in the official jobless rate to 8.4% from 10.2%, marking the fourth straight decline from a pandemic peak of 14.7%. A separate survey of households showed a much larger number of people returning to work (3.76 million) and a sharp decline in the unemployed (-2.8 million).
“I would say today’s jobs report was a good one,” Federal Reserve Chairman Jerome Powell told NPR in an interview.
One caveat: The jobless rate would have been closer to 9% if households gave an accurate description of their employment status, the Bureau of Labor Statistics said. Some survey respondents have mistakenly classified themselves as absent from work instead of unemployed, a problem that has plagued the BLS survey since the pandemic began.
Several million Americans still haven’t returned to the labor force, however, since the start of the pandemic and some 29 million were reportedly receiving jobless benefits as of the middle of last month.
The start of the school year, what’s more, has also spawned fresh problems for companies and their employers.Many parents lack day-care options and are grappling with how to care for their school-age children learning at home while they work at the same time.
A new Federal Reserve study found the new school year has made it harder for businesses that are hiring to attract workers.
A stalemate in Congress over another financial-rescue package has also left many unemployed Americans in a more precarious financial position. A $600 federal unemployment stipend expired at the end of July and small businesses can no longer apply for loans to help cover payroll costs.
A spate of companies such as American Airlines /zigman2/quotes/209207041/composite AAL -2.47% , United /zigman2/quotes/205037281/composite UAL -4.18% and MGM Resorts /zigman2/quotes/209932643/composite MGM -4.49% , meanwhile, have announced new furloughs and layoffs with their businesses still in a deep slump.