The U.S. added 943,000 jobs in July as a summer rush of travel and recreation spending powered the economy through surging coronavirus cases, the Labor Department reported Friday.
The unemployment rate fell to 5.4 percent in July from 5.9 percent last month, according to the monthly jobs report, as employment growth exceeded the 850,000 consensus job gain projected by economists.
The U.S. was expected to see another strong month of job growth as consumers spent the summer enjoying activities restricted by the coronavirus pandemic.
The rapid spread of COVID-19 among unvaccinated Americans, along with several red flags from private-sector data, raised questions about the strength of the labor market last month. But the delta variant appeared to have little impact on hiring in July as job growth accelerated for the fourth consecutive month.
More than a third of July's job gains came from the leisure and hospitality sector as Americans continued to shift their spending away from goods and toward experiences. Restaurants and bars added 253,000 jobs, hotels and resorts added 74,000 jobs and arts, entertainment and recreation added 53,000.
Public schools also added 221,000 jobs in July, though the Labor Department acknowledged that those figures could be inflated by seasonal adjustments and the way COVID-19 upended hiring cycles.
Other industries boasting strong jobs gains included professional and businesses services (60,000), transportation and warehousing (50,000), and health care (37,000), while the retail sector lost 6,000 jobs in July.
The strong jobs report comes at a critical time for President BidenJoe BidenHow 'Buy American', other pro-US policies can help advocates pass ambitious climate policies Overnight Defense & National Security — Presented by Raytheon Technologies — Biden backtracks on Taiwan Photos of the Week: Manchin protestor, Paris Hilton and a mirror room MORE, who has faced growing criticism from Republicans and concern among voters about the potential impact of his economic agenda. While Biden and Democrats enjoyed a wave of support after the March passage of the $1.9 trillion stimulus bill, rising inflation and hiring struggles for small businesses began to weigh on consumer confidence.
But July's stellar jobs gain, along with substantial upward revisions to the June and May jobs reports, gives Biden and Democrats solid signs of the U.S. economy adapting to a difficult landscape.
“Today’s jobs report is decisive proof that Democrats’ Build Back Better economy is working. Under President Biden and the Democratic Majorities in Congress, millions of good-paying jobs have been created, paychecks are surging, the economy is growing at the fastest rate in nearly forty years and the share of Americans living in poverty is set to reach the lowest level on record," said Speaker Nancy PelosiNancy PelosiJudge to hear Trump's case against Jan. 6 committee in November Kamala Harris engages with heckler during New York speech GOP lawmaker calls for Meghan, Harry to lose royal titles over paid leave push MORE (D-Calif.) in a statement.
June's initially reported gain of 850,000 jobs was revised up to 938,000 in the July report, and May's gain of 583,000 was revised up to 614,000 — a total of 119,000 between the two months.
The sharp decline in the unemployment rate also came as the labor force participation rate stayed even, and helped narrow some racial disparities in the labor market. The employment to population ratio also rose 0.4 percentage points, which shows a greater portion of job-seekers finding work.
Hispanic unemployment dropped from 7.4 percent to 6.6 percent in July as labor force participation remained roughly even. Black unemployment also dropped from 9.2 percent to 8.2 percent, but labor force participation also dropped 0.8 percentage points in July, which likely reduced the jobless rate as well. White unemployment was still substantially lower, at 4.9 percent.
The strength of the labor market also pushed wages higher, with average hourly earnings increasing by 11 cents in July and 4 percent year-over-year.
"Overall, the labor market appears to be making steady progress towards recovery," said Daniel Zhao, senior economist at Glassdoor, in a Friday analysis. "However, storm clouds are on the horizon with outbreaks of the COVID-19 delta variant rapidly spreading."
Zhao, like many analysts, warned that the July jobs report was complied several weeks before the Centers for Disease Control and Prevention urged all Americans, regardless of vaccination status, to wear masks in indoor public spaces. While vaccinated individuals are still extremely unlikely to suffer serious symptoms even if infected with the delta variant, the decision prompted many businesses to reimpose mask mandates, delay returns to the office and raised questions about potential school closures.
"While payroll gains accelerated in July as the labor market made steady progress towards a recovery, today's report is a last look at the labor market before the impact of the delta variant is fully felt," Zhao said.
Updated at 9:35 a.m.