The number of jobs added by the US economy in August was very disappointing, with only 235,000 positions vs. expectations of 720,000.
The figure was well down on the 1.05 million jobs created in July, adding to fears that the recovery from the pandemic may be running out of steam.
Despite the disappointing hiring levels, the unemployment rate fell to 5.2% in August from 5.4% in July.
Economists say rising infections caused by the Delta variant have hit spending on travel, tourism and hospitality.
They also note that the Labor Department’s data was collected in the second week of August, so does not reflect the impact of hurricanes Ida and Henri in the second half of the month.
President Joe Biden said he was disappointed but defended his record on the economy, saying it was growing consistently.
“Total job creation in the first seven months of my administration is nearly double, double any prior first-year president,” he said.
“While I know some wanted to see a larger number today, and so did I, what we’ve seen this year is a continued growth, month after month in job creation.”
According to the US Bureau of Labor Statistics, there were notable job gains in August in professional and business services, transportation and warehousing, private education and manufacturing.
However, employment declined in retail and was flat in leisure and hospitality, after increasing by an average of 350,000 per month over the previous six months.
While the number of people unemployed edged down to 8.4 million, it remains well above the pre-pandemic level of 5.7 million seen in February 2020.
Average earnings also jumped in August, suggesting that employers are trying to lure workers back amid labor shortages in some industries.
The US economy contracted sharply in 2020 during lockdown but has rebounded strongly in 2021.
House prices are rising and corporate results remain strong. However, like most economies, the US is facing supply chain issues that have dragged on manufacturing growth.
Inflation has also jumped as the economy reopens, although the Federal Reserve believes the rise will be transitory.