July Brings Job Gains, But Economy Still Reeling
While the addition of 1.8 million jobs provides room for cautious optimism, improvement varies widely by region and volatility remains an issue.
The U.S. unemployment rate dropped to 10.2 percent in July, with the addition of 1.8 million jobs, the U.S. Bureau of Labor Statistics announced on Friday morning. Following a mixed bag of reopenings and rollbacks across the country, the figure underpins a decelerating improvement trend after the addition of 7.5 million positions during the previous two months. The new data reflects a 90-basis-point drop for the unemployment rate since last month, the third consecutive improvement.
Leisure and hospitality once again led gains with the addition of 592,000 positions, but remained well behind pre-pandemic levels. Of these, 502,000 jobs were added in the food services and drinking services subsector. Government (301,000), retail trade (258,000), professional and business services (170,000) and health care (126,000) also recorded significant improvement. Mining (-7,000) was the only sector to record a contraction, same as in May.
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In addition, initial unemployment claims released on Thursday by the Department of Labor for the week ending on August 1 clocked in at nearly 1.2 million for the whole country, in line with the slowly descending path of the past two months. And while the number is significantly below the initial shock of 6.8 million claims filed in only one week, it is still more than five times the historic average, with the figure hovering between 200,000 and 250,000 prior to the pandemic. Since mid-March, the total number of claims has surpassed 55 million.
A wide array
While the national unemployment rate represents a good general gauge, the situation varies widely across the map, with volatility reflecting the geographic evolution of the coronavirus and the patchwork of measures taken to combat the health crisis.
Data for the July breakdown will be available later in the month, but June data already offers a good snapshot of where things may be heading on a local and regional level. At a state level, the figure ranged between 4.3 percent (Kentucky) and 17.4 percent (Massachusetts) in June. At a metropolitan level, it ranged between 3.5 percent (Logan, Utah) and 34.5 percent (Atlantic City, N.J.) for the same month.
As such, the economic profile of cities and their employment composition will play vital roles in their recovery timeline, something that is already apparent. Leisure- and energy-oriented cities, alongside several coastal gateway metros, took the first hit, which was still reflected by June unemployment data, with Los Angeles, Las Vegas, Detroit, New York, Boston and Orlando recording the largest unemployment rates among the country’s 30 largest MSAs.
Meanwhile, metros that are tech-centric or have a strong life sciences presence, as well as several cities that hold a highly diversified workforce or a large government component, managed healthy rebounds. The list includes MSAs such as Austin (from 11.4 percent in May to 7.5 percent in June), Dallas-Fort Worth (from 12.3 percent to 8.4 percent) and Charlotte (from 13.2 percent to 8.4 percent). Even so, the full effects of the downturn will take months, if not years, to unfold, and the recovery is set to depend on the timeline of the pandemic.
A bleak picture
Employment numbers are a key indicator for the multifamily sector and the economy at large, but several other issues are complicating the outlook further. While political negotiations for a second rescue package have not yet produced a consensus, both the $600 weekly bonus in unemployment benefits and many eviction moratoriums have expired, including the federal one, leading to fears that a strong wave of evictions may soon bring a ‘domino effect.’