There was much to cheer in July’s surprisingly strong nonfarm payrolls report, but there is also just enough bad news to leaven an otherwise celebratory mood.
The most encouraging headline was a coronavirus-battered economy created nearly 1.8 million jobs during the month, enough to pull the unemployment rate down to 10.2%. It underscored how a battered U.S. labor market still has sufficient animal spirits to generate jobs – even in the face of a wave of coronavirus diagnoses around the country, which are showing tentative signs of cresting.
The COVID-19 crisis has retained its vise-like grip on the Sun Belt, which is threatening the trajectory of a U.S. economic rebound.
However, “with new infections now trending clearly lower again and high-frequency activity indicators showing tentative signs of a renewed upturn, employment should continue to rebound over the coming months,” according to Capital Economics’s senior U.S. economist Andrew Hunter.