The U.S. economy added more jobs than economists expected last month, but the diminishing rate of monthly new hires is ominous, National Urban League CEO Marc Morial said Friday on CNBC.
The August Labor Department employment report shows payrolls increased by 1.37 million with most hires coming in government and retail.
“There ought to be a cautionary note on this report, because this report portends, I think, some tough and difficult days ahead,” Morial, former mayor of New Orleans, said in a “Power Lunch” interview.
“We’ve got to look at this report in the context of what’s happened over the last several months and the uncertainty of the months ahead.”
Morial said he is concerned about both where employment expansion was concentrated and the slowdown in new additions compared with prior months.
The August figure is the second straight month-over-month decline, down from 1.7 million new payrolls in July and 4.8 million in June, as the country attempts recovery from a lockdown to contain the spread of the coronavirus that battered the global economy. About 10.6 million jobs have been added since May, bringing the unemployment rate back down to 8.4%, down from a peak of 22.8% in April, when tens of millions of jobs were a casualty of nonessential business closures.
More than 40% of the new jobs came in the form of government and retail hires. About 344,000 hires were made by the federal government, in large part temporary workers to run the 2020 Census. Leisure and hospitality, one of the industries harmed most by travel restrictions and physical distancing efforts, saw 174,000 additions. About 75% of that came in the area of food services and drinking establishments. Employment in food services and drinking places remains 2.5 million below its February levels.
“There’s no doubt we’re seeing, as people are called back to work, the hospitality sector, the service sector, the restaurant sector still lags behind,” Morial said. “A continuing concern that we have is, as cooler months lie ahead, we cannot predict what the impact will be on Covid-19 and whether the number of cases may necessarily spike, therefore causing further, if you will, reversals of some of the efforts to reopen the economy.”
Job creation in August represents a continued improvement in the U.S. economy but a full recovery won’t happen until the coronavirus pandemic is under control, Boston Federal Reserve President Eric Rosengren said Friday.
The economy is in a “very significant recession” with the unemployment rate at 8.4%, and the ongoing pandemic can delay the recovery in the jobs market without a widely accessible coronavirus vaccine, Rosengren said on “The Exchange.”
Morial, who leads the largest historic civil rights and urban advocacy organization, also highlighted the disparate levels of unemployment across racial groups. While the jobless rate fell across the board, the jobless rate for Black people stood at 13%, compared with 10.7% for Asians and 10.5% for Hispanics. For White people, the rate stood at 7.3%.
The federal stimulus measures passed earlier this year have helped to drive some of the job creation, but the future is in peril without more aid, Morial said.
Vice President Mike Pence said Friday morning that the Trump administration had reached a consensus with congressional Democrats to avoid a potential government shutdown, but it does not include coronavirus relief. Lawmakers are expected to pick back up on pandemic aid discussions when they return to Capitol Hill after Labor Day, with the November election less than two months away.
“Let’s get a robust stimulus plan in place, nothing small, something significant to continue the march back in this economy,” Morial said.