(CN) — The American economy added back just 1.8 million jobs last month, signaling the recovery has slowed down as coronavirus cases spiked this summer.
The gain reported Friday by the Labor Department is less than half of the 4.8 million jobs that were added back in June, after more than 20 million jobs were lost in March and April when the pandemic shut down businesses and kept people at home.
While the number of new positions in July beat many economists’ expectations of about 1.5 million, the economy is still down 12.9 million jobs compared to February, before the pandemic-driven recession hit.
The unemployment rate fell to 10.2% last month, compared to 11.1% the month before.
As of Friday, more than 4.8 million Americans have been infected with Covid-19, the respiratory disease caused by the novel coronavirus, and over 160,000 have died, according to a Johns Hopkins University tracker.
“The slowdown in jobs gained is likely due to a resurgence of the coronavirus and re-shuttering in parts of the country,” said Elise Gould, senior economist at the nonprofit think tank Economic Policy Institute.
Most of the July employment gains were seen in the leisure and hospitality industry, which includes restaurants and bars. That sector added 592,000 positions, but it’s still down 2.6 million jobs since February. Retail trade added 258,000 jobs while professional and business services gained 170,000.
Gould noted the unemployment rate is still higher than the worst month of the Great Recession.
“Federal policymakers need to act now to reinstate the $600 unemployment insurance benefits to the 30+ million workers who are desperately trying to make ends meet,” she wrote. “And, those benefits are supporting a huge amount of spending, which means, with it, the loss of about 5 million jobs.”
Nick Bunker, economic research director at Indeed Hiring Lab, noted this is not a quick, V-shaped recovery.
“Adding 1.8 million jobs is not sufficient for any sort of speedy recovery after the astronomical job losses of early spring,” he said. “Progress is being made, but the pace has slowed and there’s still a ways to go.”
Bunker said that while unemployment is moving in the right direction, it is still historically high.
“By both the unemployment rate and the cumulative hit to employment, the current labor market crisis is worse than the Great Recession, a supposedly once-in-a-generation economic crisis,” he wrote. “Until the virus is under control, a full and sustained recovery will remain out of reach.”
The report on jobs added back last month lags behind more recent data because it is based on information collected in mid-July. The Labor Department reported Thursday that 984,000 more Americans applied for unemployment benefits last week, which is not reflected in Friday’s unemployment percentage.
The health care industry added back 126,000 jobs in July and government employment rose by 301,000. Modest gains were also seen in transportation and warehousing (38,000), manufacturing (26,000) and construction (20,000).
Andrew Hunter, senior U.S. economist at Capital Economics, said the economy recovery “remains firmly intact” despite the recent surge in Covid-19 cases.
“With new infections now trending lower again and high-frequency activity indicators showing tentative signs of a renewed upturn, employment should continue to rebound over the coming months,” he said.