With unemployment down and pay up, Delta variant is clearly 'scaring off customers'
With unemployment down and pay up, Delta variant is clearly 'scaring off customers'

Yahoo Finance’s Javier David reports on the August jobs report, the Delta variant, and why the consumer is not spending as much.
The usual summer doldrums — and one particularly implacable virus — clearly took its toll on U.S. job creation last month.

The market’s most closely watched high-frequency data series was an unmitigated letdown in August, with new jobs checking in at 235,000, roughly a third of consensus market expectations and well below July’s blockbuster reading. It dampened Wall Street’s nigh-unbridled enthusiasm, and set the stage for the Federal Reserve’s next policy meeting.

As has been the case for much of the last two years, the resurgent pandemic was a force multiplier behind August’s weak payrolls. Greg Daco at Oxford Economics told Yahoo Finance Live that “a combination of factors” — including COVID-19 — was leading to softer job creation. He added that it may even create a self-fulfilling prophecy leading to an economic deceleration, “weighing on people’s ability to spend because it’s weighing on income.”

Already, grim consumer sentiment readings have become a canary in that particular coal mine. At a minimum, the report calls into question the Fed’s plans to palliate the economy with stimulative bond purchases (which, depending on who you ask, could either be a good or bad thing).

Yet underneath the hood of the U.S. economy’s job machine, there were at least a couple of reasons for encouragement.

First, the unemployment rate dropped to 5.2%, even as the labor force participation rate stalled out at 61.7%, and prior months of job gains were revised upward. During prior downturns, manufacturing jobs have been loss leaders — but the sector has been among the best performers during this recovery, adding 37,000 positions last month.

Strength in the household survey, as well as gains among underemployed workers, were a reflection of what Goldman Sachs called “improvement in overall employment and a small decline in the number of part-time workers for economic reasons.” Meanwhile, “the number of permanent job losers declined by 443,000, to 2.487 [million],” the bank added.