Headline statistics from the Bureau of Labor Statistics Employment Situation Report on Friday morning showed further labor market recovery from COVID. But under the surface, August had significant labor market deterioration. While payrolls beat, the unemployment rate fell faster than expected, wages were stronger than expected, and hours worked rose against expectations, the number of Americans who are on permanent layoff (involuntarily unemployed and looking for work) rose by more than 500,000, and their share of the overall labor force is now the same as during the peak of the early-2000s recession.
While the huge drop in temporarily laid-off workers that has been ongoing for several months continued, widening of permanent job loss suggests that the labor market is still deteriorating as businesses close, reduce output, or are forced from re-opening thanks to the ongoing economic impact of COVID. While the headline numbers were welcome, it’s important to understand that they don’t tell the full story. Please note both charts below show data for all periods it is available. For more on the jobs report, try out a Bespoke subscription to receive our weekly Bespoke Report in your inbox this evening. Click here to start a two-week free trial.