The unemployment rate fell to 8.4 percent, the U.S. Bureau of Labor Statistics reported Friday, with total non-farm payroll employment rising by 1.4 million in August. Unemployment beat expectations, falling from last month’s 10.2 percent.
The number of individuals on temporary layoff has declined greatly since its mid-pandemic peak, falling to 6.1 million as more states reignite economic activity. Permanent job losses increased from last month, however, reaching a seasonally-adjusted rate of 3.4 million, more than double August 2019.
The real estate sector of the economy, including rental and leasing, saw a huge spike, adding 23,000 jobs from July to August. There are still approximately 150,000 fewer individuals employed in the industry than this time last year.
“These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it,” the bureau said in a statement. “In August, an increase in government employment largely reflected temporary hiring for the 2020 Census. Notable job gains also occurred in retail trade, in professional and business services, in leisure and hospitality, and in education and health services.”
Odeta Kushi, the deputy first economist at title insurance firm First American, said on Twitter that the report suggests a slowdown in the economic recovery.
“While the unemployment rate shows overall improvement, the private sector added only 1 million jobs in August, down from 1.5 million in July,” Kushi said.
“Permanent economic damage continued to increase in this month’s report — 1.5 million permanent job losses in March to 3.4 million in August,” Kushi added. “Why does this matter? It’s permanent job losses that lead to long-term unemployment and would prolong economic recovery.”
Those permanent losses could eventually impact the housing market, which has been mostly immune to COVID-19 so far with its v-shaped recovery. The services-driven recession has disproportionately hurt younger, lower-wage renters.
Conversely, potential homeowners who remained employed were able to channel savings to buying a home and taking advantage of low rate, according to Kushi. But with permanent job losses piling up, that could change.
“Housing has remained immune due to demographic demand and the Fed policy keeping rates low, but it cannot remain immune to the impact of homeowners having less household income,” Kushi said.