U.S. Jobs: The Delta Delta Wreaks Havoc on August Numbers

U.S. employment growth took a nosedive in August.

In the concluding paragraphs of my previous U.S. jobs report article (August 6) I observed that "most economists ... are convinced that the next one or two employment reports can't help but show some retrenching in light of recent spikes in infection levels." Sometimes, there's no pleasure in being right, and this is one of those times.


The "Delta Delta" in this story's title refers to two meanings for the term. The first one follows from that letter's position in the Greek alphabet, as in fourth in a series (the Delta variant of COVID is the fourth and most fearsome of the major variants identified via genetic sequencing so far).


The second one comes from math, and describes the change in value of some variable — in this case the rates of infection and hospitalization in the wake of the Delta variant. It's BIG.


Whereas the new report revised the July numbers upward to 1.053 million and boosted June's to 962,000 jobs added, August comes in at a paltry 235,000. That's less than 25 percent as compared to either preceding month. A 75 percent drop can only be described as a whopping "delta" (per definition two above) and a worrying sign of what lies ahead.


That said, unemployment declined by 0.2 percent to 5.2 percent. But monthly job growth for 2021 has averaged 586,000, and August's numbers are less than half that value. As progressions go, one has to hope this is a momentary blip downward, rather than a drastic fall-off in job growth that persists into September and beyond.


Where Did Growth Occur in August?


Jobs were added in the following sectors for August, 2021:


U.S. employment growth went into a tailspin in August.

Professional and business services added 74,000 jobs, including 19,000 jobs in architectural and engineering services, 10,000 jobs in computer systems design and related areas, and 7,000 jobs in scientific R&D niches.

Transportation and warehousing added 53,000 jobs in August, to bring this sector 22,000 above pre-pandemic levels of employment (that's a first since the whole situation started in March/April 2020).

Private education added 40,000 jobs, whereas state government education dropped 21,000 jobs, and local government education lost 6,000 jobs. That makes it almost a wash (net gain: 13,000 jobs).

Manufacturing added 37,000 jobs, of which 24,000 went to motor vehicles and parts, and another 7,000 to fabricated metal products.

Other services also added 37,000 jobs, with 19,000 in personal and laundry services, and 9,000 in repair and maintenance positions.

Information (the home sector for all of us IT professionals) gained 17,000 jobs, of which 12,000 went to data processing, hosting and related services.

Financial activities added 16,000 jobs, of which 11,000 was in real estate.

Mining added 6,000 jobs of which 4,000 went to above-ground support positions.

Retail trade — yikes! — lost 29,000 jobs in august, with 23,000 of that lost from food and beverage outlets, and another 13,000 in building materials and garden supply stores.


All other sectors were flat for August. Surprisingly, this includes leisure and hospitality, which had been going gangbusters for most of the prior months in 2021. Other flat sectors were construction, wholesale trade, and healthcare.


My take on this read-out is that the economy has paused to take a breather while the impacts of the Delta Delta continue to make themselves felt.


Other Viewpoints and Analyses


The Washington Post calls the August numbers "lackluster" in a masterpiece of understatement. The Post also uses the phrases "a disappointing month of hiring" and a "dramatic slowdown in hiring" to describe what's currently unfolding in front of us right now.


They also observe that the numbers reported "fell well below economists' forecasts" in direct opposition to what happened in July, when the numbers came in higher than expected. They also observe that COVID daily case averages jumped from 25,000 in mid-July to a whopping 160,000 cases per day by late August (today's reading: just over 163,000, very much in the same ballpark, and trending solidly upward since July 7).


U.S. employment growth hit a headwind in August.

Even those trying to put a positive spin on the dismal decline are left to talk about "momentum and progress" encountering a headwind slowing things down considerably. (I'm paraphrasing remarks attributed to Nick Bunker, an economist at job posting and placement firm Indeed.com.)


The Wall Street Journal characterizes the jobs report as a result of "employers [having] pulled back sharply on hiring during a surge of COVID-19 cases driven by the Delta variant." They go on to observe that the biggest impacts, as one would expect, were in "services sectors that involve in-person interaction."


They also speak to "weakening consumer spending growth and confidence." Their own search for a positive spin emphasizes a "new pandemic low of 340,000 ... jobless claims" for the week of Aug. 23, and a 13 percent increase in online job postings for the month (source: ZipRecruiter).


NPR's reporting puts the phrase "latest Coronavirus surge slams brakes on economy" in its headline. It quotes ADP labor economist Nela Richardson saying, "The labor market economy has downshifted," with the now-familiar headwind metaphor posted by impacts of the Delta variant following on the heels of that remark.


NPR also stresses regional impact variations, and mentions a reported decline in the southeastern U.S. from Homebase (a maker of scheduling software for small businesses), where New England (with fewer cases and less growth in infections and hospitalizations) faring somewhat better.


On an interestingly scary note, NPR's coverage conclude with an observation that, while wages are up 4.3 percent year over year, inflation came in at 5.4 percent for July so that purchasing power is dropping even as wages are rising.


Where to Next?


Good question! As long as infection rates keep rising, things can't get too much better. My gut feel is that with booster shots scheduled to kick off next month, it could take until the end of 2021 to get back on a strong footing, and for growth to pick up where it left off. I guess we'll just have to wait and see what happens, and hope for the best.


Would you like more insight into the history of hacking? Check out Calvin's other articles about historical hackery:
About the Author

GoCertify's mission is to help both students and working professionals get IT certifications. GoCertify was founded in 1998 by Anne Martinez.