'The recovery didn't stop, but it slowed': Here's what 5 economists are saying following July's jobs report

  • The July jobs report released Friday showed that US employers added 1.8 million jobs during the month and that the unemployment rate declined to 10.2%.
  • That beat economist expectations for 1.5 million payrolls added in July and the unemployment rate at 10.5%. 
  • While the report showed progress in the labor market recovery from the coronavirus pandemic recession, it also signaled that the pace of the recovery is slowing. 
  • Here's what five economists said about the July report. 
  • Visit Business Insider's homepage for more stories.

The July jobs report released Friday beat expectations, showing that US employers added 1.8 million jobs during the month and that the unemployment rate decreased to 10.2%. Economists had forecast 1.5 million jobs added, with unemployment to 10.5%. 

While a positive add, the report also showed that the labor market recovery from the coronavirus pandemic-induced recession is losing speed. The 1.8 million jobs lost in July was much less than the 4.8 million added in June, and 2.7 million added in May. 

"It's great to see progress, but the speed of progress has slowed down and we're still far from any sort of healthy labor market right now," Nick Bunker, an economist at Indeed, told Business Insider. 

Employment remains down 12.9 million jobs from its pre-pandemic February level, according to the report, meaning that only about 42% of the jobs lost during the crisis have been recovered. Bunker pointed out that the cumulative hit to unemployment and the new unemployment rate is still worse than the Great Recession. 

Here's what five economists said about the July jobs report. 

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1. Indeed: "The next few months are a race against the clock" 

"Early in the crisis job losses were because people were in businesses that were reticent to engage in consumption or investment, because they were concerned about the virus itself," Bunker told Business Insider. "Now it's a broader, more systemic economic damage than just the public health."

"We always need to appreciate progress, but there's no indication that it's fast enough," said Bunker. "The next few months are a race against the clock." 

"We want to see really strong gains over the next few months to make sure we can get to a spot where these folks on temporary layoff get jobs," Bunker said. "If a portion of them don't find or end up in a more permanent form of employment, the bounce back is going to be much slower."

2. Bank of America: "The recovery didn't stop, but it slowed" 

"There's a slow down in job creation for the last few months, but we still are seeing further healing in the labor market," Bank of America economist Michelle Meyer told Business Insider.

Given the amount of workers displaced by the pandemic, "it will take time to fully heal the labor market and bring those workers back into full employment, but progress is being made," she said. 

The path ahead will likely be bumpier, according to Meyer, and "depending on the part of the economy you're focusing on, you're probably going to see a little bit of a different story depending on the region, depending on the path of the virus, depending on stimulus." 

3. Glassdoor: "The report exposes cracks"

"The report exposes cracks in efforts to reopen as employers struggle to deal with resurgent outbreaks around the country," Glassdoor economist Daniel Zhao said in a Friday note. "The slowdown in the rate of recovery amid a worsening pandemic shows that a sustainable return to economic normal is hinged on first addressing the public health crisis."

"Today's jobs report comes at a critical juncture," said Zhao. "Not only is it the first jobs report to capture the impact of the resurgent pandemic on American workers, it also coincides with Congressional negotiations on financial relief for many millions of Americans. And with less than three months until the election, attention on the coming jobs reports will likely heighten."

"Today's report increases the pressure on policymakers to extend financial relief to avoid the slowdown from turning into a full-blown double-dip recession," he said. 

4. Euler Hermes: "Years before we get back anything like full employment" 

"We should walk away with it in general saying, 'okay, this, was a big chunk of jobs that we got back," Dan North, senior economist at Euler Hermes North America, told Business Insider. "It would be an unthinkable gain monthly gain before the pandemic." 

Still, there "are some other considerations here," said North. One is that "you have to ask how sustainable these gains are." If there is a second wave of COVID-19, many of the jobs added back in industries such as leisure and hospitality and retail trade could be on the chopping block again, according to North. 

In addition, North pointed out that the bulk of jobs added back were "low-hanging fruit," or workers on temporary layoff returning to businesses as they reopened. 

"It's still probably going to be a couple of years before we get back anything like full employment," said North. 

5. Jefferies: "The labor market remains stunningly resilient" 

The July job gains "can only be described as solid," wrote Aneta Markowska, chief economist at Jefferies, in a Friday note. "In the face of the covid resurgence and a growing headwind from PPP loans, the labor market remains stunningly resilient." 

She continued: "Even more surprising was the fact that covid-sensitive sectors were among the fastest growing industries in July (albeit much slower than in May/June)." 

"The near-term outlook for the labor market and the economy will be highly dependent on fiscal policy," said Markowska. "Ironically, today's report might be a setback for fiscal negotiations as it will strengthen the conservatives' belief that no more help is needed." 

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