July jobs report: Economy adds back 943,000 payrolls, unemployment rate falls to 5.4%

U.S. employers added back more jobs than expected last month, with payroll gains moving in tandem with improving economic activity and consumer mobility during the recovery. The jobless rate also fell to the lowest level since March 2020, improving more than expected. 

At 943,000, payrolls last month grew by the most since August 2020. Job growth was also upwardly revised for May, coming in at 614,000 versus the 583,000 previously reported, and for June, with an upward revision to 938,000 from 850,000. 

The economy, however, is still trying to recoup millions of jobs lost since the start of the pandemic. On net, the economy has shed 5.7 million payrolls since March of last year, with much of this deficit still present in the leisure and hospitality industries. These employers shed a total of nearly 2 million jobs since the pandemic first brought about shutdowns across the U.S. 

Leisure and hospitality employers were again the leaders in bringing back jobs last month, with payrolls rising by 380,000 to comprise more than a third of the total July jobs gains. In the private sector, education and health services employment also contributed notably, with payrolls increasing by nearly 90,000. 

A significant contributor to the July payrolls report also came from government jobs, especially in education. Overall, government payrolls were up by 240,000 last month. These increases, however, may overstate the extent of actual job growth occurring in the sector, given seasonal adjustment issues due to the pandemic. 

"Staffing fluctuations in education due to the pandemic have distorted the normal seasonal buildup and layoff patterns, likely contributing to the job gains in July," the Labor Department said in its report Friday. "Without the typical seasonal employment increases earlier, there were fewer layoffs at the end of the school year, resulting in job gains after seasonal adjustment. These variations make it more challenging to discern the current employment trends in these education industries."