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Upwork Economist: August Unemployment Better Than Expected, But It's Still A Recession

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Upwork Economist: August Unemployment Better Than Expected, But It's Still A Recession

The national unemployment rate was 8.4% in August, the Bureau of Labor and Statistics said Friday. The number of unemployed people fell by 2.8 million to 13.6 million.

What Happened: Total non-farm payroll employment increased by 1.4 million jobs during August. Employment gains occurred in retail trade, professional and business services, leisure and hospitality and in education and health services.

The retail trade industry saw the largest gains, with 249,000 jobs added.

Government job gains also accounted for a large percentage of the monthly gain in total nonfarm employment. These 251,000 reported hires for federal government roles may not be long-term ones, with many of the positions tied to the the hiring of census workers. The census wraps up in October.

The average payroll for private, non-farm jobs increased by 11 cents for an average hourly rate of $29.47.

Why It’s Important: The headline numbers came in slightly above expectations, but better than expected doesn't mean good, Adam Ozimek, chief economist at Upwork Inc (NASDAQ: UPWK), said in an email to Benzinga. 

It's a worrying sign for job growth to decelerate so fast when the economy still needs to recover half of the jobs lost this year, the economist said.

Even if the over 2.1 million people who have lost their jobs permanently since the crisis started earlier this year got their job back, the country would still be in a major recession, he said. 

What’s Next: Keep looking at the number of jobs that are permanently lost. In August, the number of permanent job losses increased by 534,000 to 3.4 million, the highest level since 2013, Bloomberg reported.

As this number continues to increase, it points to long-term economic scarring for workers. Unemployment is still 4.9% higher than February levels, but making its way back to pre-pandemic levels.

September unemployment numbers are scheduled for release at 8:30 a.m. on Friday, Oct. 2. 

 

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