U.S. hiring slows to unexpected low after two strong months

America’s employers added just 235,000 jobs in August, a surprisingly weak gain after two months of robust hiring at a time when the delta variant’s spread has discouraged some people from flying, shopping and eating out.

The August job gains the government reported Friday fell far short of the big gains in June and July of roughly 1 million a month. Those increases were revised higher by a combined 134,000. The gains in June and July followed widespread vaccinations that allowed the economy to fully reopen from pandemic restrictions.

The actual number was well below forecasts. Economists had estimated that employers added 750,000 jobs in August, according to the data provider FactSet. Others were more pessimistic, expecting job growth of 500,000 or less.

Still, the number of job openings remains at record levels, and hiring is expected to stay solid in the coming months. And even though hiring was relatively tepid in August, the unemployment rate dropped to 5.2%, from 5.4% in July.

Friday’s report provided numerous signs that the delta variant had a depressive effect on job growth last month. The sectors of the economy where hiring was weakest were mainly those that require face-to-face contact with the public.

Hiring in a category that includes restaurants, bars and hotels, for example, sank to zero after those sectors had added roughly 400,000 jobs in both June and July. With COVID cases having spiked this summer, Americans have been buying fewer plane tickets and reducing hotel stays. Restaurant dining, after having fully recovered in late June, has declined to about 10% below pre-pandemic levels.

The slowdowns in travel and dining out meant that employers had less reason to add jobs in those areas. And many job hunters were likely reluctant to take public-facing jobs as the delta variant has spread.

Health care and government employers also cut jobs in August. Construction companies, which have struggled to find workers, lost 3,000 jobs despite strong demand for new homes.

Government employers shed 8,000 jobs, mostly because of a sharp declines in local education hiring after strong gains in June and July. That decline reflected, at least in part, volatile hiring patterns around education as schools prepared to reopen amid the pandemic.

One areas of solid hiring strength last month was among manufacturers and shipping and warehouse companies.

But job growth among service industries that involve public engagement weakened sharply, a consequence in some cases of diminished public traffic. Some live shows, including the remaining concerts on country star Garth Brooks’ tour, for example, have been canceled. Businesses are delaying their returns to offices, threatening the survival of some downtown restaurants, coffee shops and dry cleaners.

Yet there is much evidence that many companies are still looking to hire, particularly employers that are not in public-facing service industries like restaurants and bars. The job listings website Indeed says the number of available jobs grew in August, led by such sectors as information technology and finance, in which many employees can work from home.

Walmart announced this week that it will hire 20,000 people to expand its supply chain and online shopping operations, including jobs for order fillers, drivers, and managers. Amazon said Wednesday that it is looking to fill 40,000 jobs in the U.S., mostly technology and hourly positions.

And Fidelity Investments said Tuesday that it is adding 9,000 more jobs, including in customer service and IT.

Last month’s slowdown in hiring suggests that even though many businesses want to fill jobs, they’re unable to find all the workers they need. That trend is is pushing up wages, which rose a robust 4.3% in August compared with a year earlier. Walmart, for one, said it was giving over 500,000 of its store employees a $1 an hour raise.

Governors in about 25 states, nearly all led by Republican governors, cut off a $300-a-week in federal supplemental unemployment benefits in June and July because, they said, the extra money was discouraging recipients from looking for work. Yet the proportion of Americans with jobs or searching for one was flat in August, Friday’s report showed, suggesting that the cutoff had little impact.