The hiring blitz at bars, restaurants and hotels came to an abrupt halt in August as the combined force of more Covid-19 cases and a scarcity of willing workers kept employers from adding to payrolls.
The broad leisure and hospitality sector, which includes restaurants and lodging, added a net of zero jobs last month, a remarkable stop to a sector that had jump by an average 350,000 per month over the prior six months.
A closer look within the sector shows a loss of 42,000 jobs in food services and drinking places offset by a gain of 36,000 jobs in arts entertainment, and recreation.
The headline numbers from the August 2021 jobs report showed the U.S. economy added just 235,000 jobs last month, well short of the 720,000 expected. The unemployment rate fell from 5.4% to 5.2%. CNBC studied the net changes by industry for August jobs based on data contained in the government’s employment report.
The Labor Department noted that the flat employment in leisure and hospitality coincided with a drop in consumer confidence, which fell, in part, due to concerns about the delta variant and the continuing rise of COVID-19 cases in August.
Leisure and hospitality added 2.1 million jobs from February through July — half of all U.S. jobs added over that period. The Bureau of Labor Statistics said leisure and hospitality employment is 10% below where it was in February 2020.
The “headline number is obviously disappointing – much lower than expectations – and markets will react. But the interesting question is why the number is so low,” wrote Brad McMillian, chief investment officer for Commonwealth Financial Network.
“Looking at the unemployment and underemployment numbers, which dropped, as well as the labor force participation rate, it looks to have come from workers electing not to enter the workforce,” he continued. “This ties the shortfall to the pandemic, again, rather than to general economic weakness.”
Retail trade, which has lost jobs over several years, shed 28,500 positions in August. Food and beverage stores, as well as building material and garden supply stores, saw net job losses of 23,200 and 13,000, respectively.
Building and garden shops likely saw payrolls decline ahead of the cooler months and a deceleration in Covid-era at-home projects.
On the upside, manufacturers had a decent month with 37,000 new jobs with strong hiring at transportation equipment makers. Factories that produce cars and car parts saw some of the sector’s strongest numbers, up 24,100.
Transportation and warehousing came out best in August with a gain of 53,200 net payrolls. The Labor Department said warehouses and other storage facilities added 20,200 jobs while air transportation advanced by 11,400.
— CNBC’s Nate Rattner contributed reporting.
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