The economy fell far short of predictions and added just 235,000 new jobs in August as the delta variant of COVID-19 surged.
Economists had projected that 750,000 jobs would be gained.
The unemployment rate fell to 5.2% despite the weak job growth, the Bureau of Labor Statistics reported Friday.
The Friday report adds to the economic anxiety in the United States as it attempts to claw its way out from the lingering effects of the COVID-19 pandemic. The economy is far from where it was before the health crisis, when the unemployment rate hovered at about 3.5% and millions of more people were employed than are now.
“To have today’s numbers, 235,000, is really surprising. This is way below expectations,” said former Secretary of Labor Elaine Chao during a phone call with the Washington Examiner.
Chao, who led the department from 2001 to 2009, pointed out that as the delta variant increased over the past month, consumer confidence and workers returning decreased. She also noted that the impact could be seen in the travel sector, where business travel has been lagging behind estimates from just a couple of months ago.
Job growth in the leisure and hospitality industries stalled out in August as households pulled back on outings because of the virus.
There are also shortages of labor across the country, with some employers, especially those in the leisure and hospitality industry, reporting that they are having trouble finding and retaining employees. In order to entice workers, some companies have had to boost wages and offer other incentives such as signing bonuses.
At the same time, the economy is facing rising inflation, which has been running much hotter than economists at the Federal Reserve and in the Biden administration had predicted.
Consumer prices increased 5.4% in the year ending in July, according to the most recent Department of Labor report. The figure was slightly above expectations but less pronounced than the enormous price increases seen over the previous few months.
Consumer sentiment has additionally taken a hard hit because of the delta variant, dropping to the lowest level in a decade, according to the University of Michigan. The decline from July to August marked the third-sharpest plunge after April of last year, when it fell 19.4%, and during the 2008 recession, when it fell 18.1% in October of that year.
The Friday jobs report is the last one before the expanded federal unemployment benefits program, which provides $300 per week on top of state funding, ends on Monday. Just over half of the states ended the program early, but high-population states such as New York and California did not, and some economists think that the continuation of the program has held back the economy.