The hiring flash in bars, restaurants and hotels stopped abruptly in August as more Covid-19 cases and a shortage of willing workers prevented employers from raising payrolls.
The broad leisure and hospitality sector, which includes restaurants and lodging, created a net of zero jobs in the past month. That’s a notable stop for a sector that had risen by an average of 350,000 per month for the past six months.
A closer look within the sector shows a loss of 42,000 jobs in the hospitality sector, which is offset by an increase of 36,000 jobs in the arts, entertainment and leisure sectors.
The headlines of the August jobs report showed that the U.S. economy created just 235,000 jobs last month, well below the expected 720,000. The unemployment rate fell from 5.4% to 5.2%. CNBC examined the net changes by industry for August jobs based on data from the government’s employment report.
The Department of Labor noted that flat employment in the leisure and hospitality industry coincided with a decline in consumer confidence, which fell in part due to concerns about rising Covid cases over the past month due to the Delta variant.
The leisure and hospitality industry created 2.1 million jobs from February to July – half of all US jobs during that period. The Bureau of Labor Statistics said employment in the leisure and hospitality industry is 10% below its February 2020 level.
The “headline numbers are obviously disappointing – much lower than expected – and the markets will react. But the interesting question is why the number is so low, ”wrote Brad McMillian, chief investment officer of the Commonwealth Financial Network.
“Given the drop in unemployment, underemployment and the labor force participation rate, it appears to be coming from workers who have chosen not to enter the labor market,” he added. “This ties the deficit back to the pandemic and not to the general economic weakness.”
The retail sector, which has lost jobs for several years, cut 28,500 jobs in August. In the food and beverage markets as well as in building materials and garden centers 23,200 and 13,000 net jobs were lost.
Construction and gardening businesses likely saw payrolls decline and Covid-era home projects slowing ahead of the cooler months.
Manufacturers, on the flip side, had a decent month with 37,000 new jobs amid a strong hiring from transportation equipment manufacturers. Factories that make automobiles and auto parts posted some of the strongest numbers in the industry, up 24,100.
Transportation and warehousing performed best in August with a net increase of 53,200. The Labor Department said warehouses and other storage facilities created 20,200 jobs while air traffic increased by 11,400.
– CNBC’s Nate Rattner contributed to the coverage.
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