The payment: The economy created a disappointingly small 235,000 new jobs in August in the wake of another major coronavirus outbreak, raising the question of whether the Federal Reserve will delay its plans to wean the US off its easy money strategy.
The growth in new jobs was the lowest in seven months and was well below Wall Street's forecast. Economists polled by the Wall Street Journal had forecast an increase of 720,000.
The details of the August employment report were lackluster across the board.
The private sector, for example, only created 243,000 new jobs and employment in the leisure and hospitality industry, the part of the economy hit hardest by the virus, remained unchanged.
Recruiters looking to fill positions at O & # 39; Hare International Airport meet with candidates during a job fair. Many companies offer bonuses or higher wages to attract potential employees.
Scott Olson / Getty Images
The low profit suggests that the rapid spread of the delta strain of the coronavirus has caused many companies to temporarily suspend hiring plans, especially those dealing face-to-face with customers.
Another problem is the lack of available labor.
Millions of people who had jobs before the pandemic have still not returned to work, and companies have been complaining of labor shortages for months. They raised wages to attract workers, but so far it hasn't been enough.
The unemployment rate meanwhile fell again from 5.4% to 5.2% and reached a new pandemic low. But economists estimate that the official rate underestimates true unemployment by a few percentage points.
One major limitation: the last full summer month is notoriously difficult to predict because of the so-called August effect. The first report often underestimates job creation. Read: Beware of the dreaded "August effect"
In the financial markets, US stocks should open a little higher. Bond yields were unchanged.
Big picture: The slight increase in new hires in August is likely only a temporary setback.
While the delta caused some companies to cut their hires out of caution, most are still planning to add jobs in anticipation of the delta wave decline. The number of vacancies topped the 10 million mark for the first time in June and layoffs are at a record low.
The biggest problem for most companies is finding enough workers despite relatively high unemployment. They have a great demand for their goods and services but cannot keep up due to a surprisingly tight job market.
Read: Manufacturers struggle with labor shortages
The hope is that more people will return to work in the fall when schools reopen and the extra unemployment benefits introduced during the pandemic go away. They are due to expire on September 6th.
For its part, the Fed has announced that it will reduce or “cut back” bond purchases this year if hiring remains strong. The mild August report is likely to only postpone the central bank's announcement to November or December.
The central bank has kept a fragile economy on life support since the pandemic began by keeping interest rates at record lows. The Fed largely achieved its goal by buying $ 120 billion a month in government bonds and mortgage-backed securities.
These purchases have propelled the stock market to record highs, some critics claim, and could lead to a sell-off once the Fed starts tightening monetary policy.
Read: Consumer confidence drops to 6-month lows on delta fear and inflation
Likewise: US inflation is at its highest level in 30 years
Key data: The hiring freeze at leisure and hospitality companies came as a big surprise.
Restaurants, hotels, resorts, entertainment venues and the like had created an average of 364,000 new jobs in the past four months. Delta resulted in some customers staying away in August, forcing companies to postpone hiring plans.
However, the setting should recover as the delta falls continue to weaken. The virus outbreak could peak.
Employment also fell in retail, healthcare, construction and public administration.
The largest increase in new hires has been in professional firms with a large number of employees. They added 74,000 employees.
Manufacturers, transport companies and financial firms also hired more workers.
Record jobs and a persistent labor shortage caused wages to rise again in August. Many companies have increased pay or offered bonuses to fill vacancies.
Hourly wages rose 17 cents to $ 30.73 an hour in August. In the past 12 months, wages have increased by 4.3% and are now well above the pre-pandemic norms.
Higher wages suggest that despite the lack of new jobs in the past month, there is great demand for new workers.
As good news, the government announced that combined job gains in July and June were 134,000 higher than originally reported.
The job growth in July was increased from 943,000 to 1.05 million. The June total increased from 938,000 to 962,000.
What do you say? "The delta wave clearly undid the mindset in August," said economist Robert Frick of the Navy Federal Credit Union.
"This report is in line with the Fed's throttling, but probably not soon," said Raymond James' chief economist Scott Brown.
"Despite thunderclouds from the Delta variant, the record high demand for labor is keeping the labor market rebound," said Senior Economist Daniel Zhao of Glassdoor.
Market reaction: The Dow Jones Industrial Average
and S & P500
should open higher on Friday.