• The US Bureau of Labor Statistics on Friday said the US added 1.8 million jobs in July. That exceeded the 1.5 million payroll additions expected by economists surveyed by Bloomberg.
  • The report marks the third straight month of job gains since the US saw record payroll losses in April as part of the fallout from the coronavirus pandemic.
  • The BLS also said the US unemployment rate was 10.2% in July, down from 11.1% in June.
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The US economy added jobs for a third straight month in July, reflecting the nation’s attempts to reopen and claw back from the devastating coronavirus recession.

American businesses added 1.8 million nonfarm payrolls during the month, according to the Bureau of Labor Statistics. That exceeded the 1.5 million payroll additions expected by economists surveyed by Bloomberg.

The US unemployment rate came in at 10.2%, the BLS said, lower than the 10.6% expected by economists. It was also down from 11.1% in May. April’s 14.7% reading was the highest since the Great Depression of the 1930s.

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"Joblessness is still tremendously high, but it is moving in the right direction," said Nick Bunker, an economist at Indeed.

The data comes amid a crucial time as the US tries to recover from the damage caused by the virus, which triggered the worst recession since the Great Depression. Recent spikes in coronavirus cases have forced some states to pause or roll back their reopening plans, threatening a swift recovery.

Inside the numbers

Employment ticked up across most industries and sectors, according to the Friday report. The biggest gain was in leisure and hospitality, which rose by 529,000 in July, accounting for one-third of the gain in payrolls during the month.

Retail trade, professional and business services, healthcare, social assistance, manufacturing, and transportation jobs also gained in July. Construction jobs were little changed from a month earlier, and mining was the only sector to shed jobs in the period.

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Government payrolls rose by 301,000 in July. The BLS noted that generally, public-sector education employment falls in July before seasonal adjustments. Because these layoffs and furloughs happened earlier in the year because of the coronavirus pandemic, the July increases in local government education and state education were "unusually large," according to the report.

The number of people on temporary layoff decreased by 1.3 million in July and is now 9.2 million, roughly half the April level. Permanent job losses were little changed from the previous month, standing at 2.9 million in July. The level of permanent job losses is important to watch, as those who are not on temporary layoff have a harder time finding new employment.

Signs of weakness remain

Even with the better-than-expected data, there are some lingering signs of weakness in the labor market. US employment still remains nearly 13 million below the February level, according to the report.

Further, numerous indicators throughout July flashed warning signs that the economic recovery had lost momentum. High-frequency indicators such as data from Homebase - a scheduling app used by small businesses - and the Dallas Fed Mobility index, showed less growth in the number of people returning to work and participating in economic activity.

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US consumer sentiment slipped as new COVID-19 cases spiked, and the Household Pulse Survey showed that employment fell by 4.1 million between July 9 and July 14, the reference week for the monthly jobs report. Weekly initial jobless claims increased for two weeks in a row in July, ending an extended period of declines from the end of March.

What comes next

There remains a great deal of uncertainty around Washington's plan for a new round of stimulus, and Friday's labor-market numbers will certainly play a part. At the end of July, the additional $600 weekly unemployment benefit expired, immediately slashing income for millions of unemployed Americans.

Democrats and Republicans are still working out details for the next stimulus package. Democrats are holding steady on their proposal to extend the $600 weekly unemployment benefit, while Republicans are arguing for a lower weekly amount.

In addition, the Small Business Administration's Payroll Protection Program is set to end Saturday, and lawmakers in Washington are also at odds about extending aid to small and medium-size businesses in the next stimulus package. A recent study estimated that the program saved 1.4 million to 3.2 million jobs through the first week of June.

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