U.S. companies added to their ranks in August, pushing the unemployment rate below 10% for the first time since the pandemic began, though the economy is still out some 11.4 million jobs since March.
Nonfarm payrolls rose by 1.371 million last month, down from a revised 1.763 million new positions in July but below analysts' forecasts of 1.4 million, the U.S. Bureau of Labor Statistics reported on Friday. The unemployment rate fell to 8.4% from 10.2% last month, better than analysts' forecasts of a drop to 9.2%.
While an improvement from the dark days of March and April, the numbers continue to reflect historically high joblessness not seen in the United States since the Great Depression. The unemployment rate was 3.5% in February, a half-century low, just ahead of the pandemic. That swung dramatically in March and April, when nonfarm payrolls fell by a combined 21.4 million.
They also come as businesses continue to struggle with what to do with furloughed and laid-off workers - even with government assistance helping them with pay day. United Airlines (UAL) - Get United Airlines Holdings, Inc. Report has already announced thousands of permanent layoffs, while Ford (F) - Get Ford Motor Company Report, Boeing (BA) - Get Boeing Company Report. Coca-Cola (KO) - Get Coca-Cola Company Report and others have said they plan to cut their payrolls.
At the same time, the number of those on furlough fell dramatically. There were 24.2 million people who said they were not working because their employer either closed or lost business due to the pandemic, down from 31.3 million in July, the report said.
Those on temporary layoff also declined, falling by one-third to 6.2 million and well off the high of 18.1 million in April. However, permanent job losses did jump, rising by 534,000 to 3.4 million. Laid-off workers who returned to jobs also fell by 263,000 to 2.1 million.
One positive sign in Friday's nonfarm numbers: an increase in full-time positions. The number of persons who usually work full-time rose by 2.8 million to 122.4 million, the Labor Department said, while the number who usually work part-time increased by 991,000 to 25 million, with part-time workers accounted for about one-fourth of the over-the-month employment gain.
Among additional highlights: Retail businesses added 249,000 positions, while professional and business services added 197,000 to their ranks, and leisure and hospitality hired 174,000 positions, mostly bar and restaurant workers.
Education and health services also showed strong gains, at 147,000, while transportation rose by 78,000 due to a big gain in warehousing and storage jobs. Financial activities increased by 36,000 while manufacturing increased by 29,000 and wholesale trade was up by 14,000, the report showed.
To be sure, not everyone took Friday's numbers as a definitive sign of recovery.
"I don't think enough consideration has been made to the math showing real GDP would've been contracting (a seasonally adjusted) 10% in the third quarter, if not for the lagged effects of Uncle Sam's generosity this spring," wrote Rosenberg Research founder and chief economist David Rosenberg on Twitter.
"The U.S. economy remains on life support. Markets may not care, but that is the grim reality."