US Companies Help Push Down the Unemployment Rate in August

By Madelaine D. Sep 05 2020, 01:26 AM EDT

Companies in the United States added 1.4 million jobs in August, sending the unemployment rate below 10 percent for the first time since the COVID-19 pandemic began.

The U.S. Bureau of Labor Statistics reported on Friday that nonfarm payrolls rose by 1.371 million last month. It dropped from a revised 1.763 million new positions in July but below analysts' forecasts of 1.4 million.

The unemployment rate fell to 8.4 percent from 10.2 percent last month - a positive indicator that the economy continues to slowly recover.

US Companies Push Unemployment Rate to Fall in August — Unemployment rate was pushed to fall below 10% by the U.S. companies for the first time since the COVID-19 pandemic began. Free To Use Sounds

While there is an improvement from the dark days between March and April, the numbers continue to reflect high joblessness not seen in the U.S. since the Great Depression.

Ahead of the pandemic, the unemployment rate was only 3.5 percent in February, according to The Street. But the rate swung drastically in March and April when the nonfarm payrolls fell by 21.4 million for the combined months.

United Airlines has announced thousands of permanent layoffs while Ford, Coca-Cola, Boeing, and others have plans to cut their payrolls.

Also, the number of those on furlough fell dramatically. There were 24.2 million people who said they were not working due to business closure or their employer lost business due to the pandemic, down to 31.3 million people in July.

Temporary layoffs also declined to 6.2 million, roughly a third of April's record of 18.1 million. However, permanent job losses jumped, rising by 534,000 to 3.4 million. Laid-off workers who returned to jobs fell by 263,000 to 2.1 million.

On a positive note, the nonfarm report on Friday stated that there was an increase in full-time positions. According to the Labor Department, the number of persons who work full-time rose by 2.8 million to 122.4 million.

On the other hand, the number of people who usually work part-time increased by 991,000 to 25 million. The part-time workers accounted for about one-fourth of the over-the-month employment gain.

Additionally, the retail businesses added 249,000 positions, and professional and business services increased by 197,000. Leisure and hospitality hired 174,000, mostly bar and restaurant workers.

Health and education services also indicated substantial gains, at 147,000, while transportation rose by 78,000 due to the big gain in warehousing and storage jobs.

Financial activities increased by 36,000, while manufacturing was up by 29,000 and wholesale trade had a 14,000 increase, the report showed, as per the report.

Meanwhile, not everyone has taken Friday's data as a definitive sign of recovery.

"I don't think enough consideration 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," David Rosenberg, Rosenberg Research founder and chief economist, tweeted.