We expect the forthcoming jobs report, due for release on September 3, 2021, to show that the economy continued to add jobs at a rapid pace in August, defying Covid-19 Delta variant outbreaks across the country. Despite the four-fold increase in nationwide Covid cases between mid-July and mid-August, much of the country pushed ahead with plans to go back to normal. 

Weddings, twice postponed previously, finally went ahead. Crowds of unmasked concertgoers descended on Chicago’s Grand Park for Lollapalooza and on New York’s Central Park for a “homecoming” concert. And the vast majority of the nation’s schools opened fully for in-person instruction, bringing back a full complement of teaching and administrative staff, cafeteria workers, and school bus drivers—plus new remedial and support staff, paid for by Covid relief funds.  

As a result, the report is likely to show that employers added more than 750,000 workers to payrolls, with both the public and private sectors contributing substantially towards the gains. The increase in payroll employment will push the unemployment rate down slightly even as labor force participation shows signs of modest improvement. 

By ZipRecruiter’s count, the number of active online job postings nationwide rose 13% between July and August. At any one time in August, there were about 74% more active job postings online across the U.S. than in pre-Covid February 2020. The largest one-month increases in postings were in travel (+31%), arts and entertainment (+30%), and education (+26%).

Job gains would unquestionably have been even higher in the absence of Delta, which has curbed some forms of economic activity and put a damper on job growth. For example, restaurant dining and hotel occupancy rates fell in August, partly due to normal seasonal trends and partly in response to rising Covid cases. 

Although most evidence points towards strong gains, there is substantial downside risk. Homebase data (which covers workers at small businesses, like restaurants and retail stores) go so far as to suggest that the number of businesses open fell 2.5% and the number of people working fell by 4% in August, as people cut back their consumption of face-to-face services. 

The main economic effect of recent outbreaks has likely been the postponement of companies’ return-to-office dates. That will likely delay the full recovery of businesses like cafes, salons, and dry cleaners that cater to office workers in central business districts.