Unemployment Dips to 8.4%, Job Gains Slow

U.S. unemployment fell more than expected in August but the pace of job growth continued to slow, fueling concerns about the strength of the economy’s recovery from the coronavirus pandemic.

The Labor Department reported Friday that U.S. employers added 1.4 million jobs in August, the fourth consecutive month of growth since the economy bottomed out in April.

But job growth has slowed since the gain of 4.8 million in July and, all told, the economy has recovered less than half the 22 million jobs it lost to the pandemic.

The slowdown would have been even greater if not for the federal government’s hiring of nearly a quarter-million temporary census workers.

Unemployment declined to 8.4% last month from 10.2% in July, falling below 10% for the first time since March. It was the fourth straight decline since the pandemic peak of 14.7% in April.

Economists had expected an unemployment rate of 9.8% in August. Forecasters at the Congressional Budget Office said in April that unemployment would remain in the double digits well into next year.

“The August employment report was stronger than we expected,” said chief economist Richard Moody of Regions Financial. “That said, while the labor market is clearly healing, it remains far from healthy.”

According to The Hill, the report “showed dangerous signs of a slowing recovery that could be further threatened by a plateau in coronavirus cases heading into autumn.”

The number of those who have lost their job permanently increased by 534,000 in August, rising to 3.4 million in total and 2.1 million since February. “An increasing number of permanent job losses reflects deepening long-term to damage to the economy as more temporary layoffs become permanent,” The Hill noted.

The New York Times said the slowing job growth is “a warning that the recovery could go into reverse this fall without further government support.” Congress has yet to pass additional relief measures as programs such as the Paycheck Protection Program for small businesses expire.

“I am more concerned about where the economy is now than I was in April,” said Martha Gimbel, an economist at Schmidt Futures.