Labor secretary on ‘no growth’ jobs report: ‘Lots of reasons’ for sharp miss

Labor Secretary Marty Walsh argued on Friday, shortly after the release of the nonfarm payroll report, which showed U.S. hiring slowed sharply in August, that part of the reason for the stall is because of the resurgence in new COVID-19 infections as the delta variant has gained steam. 

Speaking with "Varney & Co." on Friday Walsh acknowledged that there is "more work to do." 

Walsh explained that there are "lots of reasons" for the sharp miss, noting that "this month we really had no growth at all." 

"I think we can tie some of it to the delta variant in some places as far as people not going out to eat as much and not working in those industries as much," he continued. 

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Walsh then outlined what he called "positive signs." 

"The economy is recovering. We are adding jobs," he said before noting that "we have more work to do." 

Nonfarm payrolls increased by 235,000 workers in August, sharply missing estimates, and the unemployment rate fell to 5.2%, the Labor Department said Friday. Analysts surveyed by Refintiv had expected the addition of 728,000 jobs and the unemployment rate to fall to 5.2%. 

The Labor Department's August job report follows the department's Job Opening and Labor Turnover Survey, or JOLTS, which was released earlier this month, revealing that the number of U.S. job openings hit a record high in June as employers struggled to find workers amid an ongoing labor shortage. 

The total number of job openings rose by 590,000 to 10.073 million, according to JOLTS.

"The forecast was off in a big way, but also the forecast was off in a big way last month as well, the other way," Walsh noted on Friday. 

Last month, nonfarm payrolls increased by 943,000 workers in July as the unemployment rate fell to 5.4%, the Labor Department said. Analysts surveyed by Refintiv were expecting 870,000 jobs gained and the unemployment rate to fall to 5.7% from 5.9%. 

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Speaking with "Varney & Co." last month, Walsh called July’s developments "great." 

"Over the last three months we’re averaging still 750,000 jobs," he told FOX Business’ Jackie DeAngelis on Friday. "And since President Biden has taken office, 4.5 million jobs have been added to the economy."

He also noted that in August "our unemployment rate did drop from 5.4% to 5.2%," aligning with Wall Street’s estimates. 

Walsh pointed to initial jobless claims for the week ended Aug. 28, which fell to 340,000, the lowest since March 2020. He called that a "sign" that the economy is "seeing growth." Continuing claims also touched their lowest level since before the coronavirus outbreak.

He noted that more than one year ago "we were hit with a global pandemic in the United States of America," stressing that "there’s no playbook" and "there’s nothing to look back at history to see how to come out of this." 

Walsh went on to say that the priority should be on making sure people are safe and are following CDC guidelines in order to help the job picture.

The labor force participation rate was unchanged at 61.7% and has held in a range between 61.4% and 61.7% since June 2020. 

Friday's disappointing report was released two days before the $300 per week in supplemental unemployment benefits is set to expire. Economists are still assessing the impact that the Child Tax Credit, which pays families up to $3,600 per child per year, will have on the labor force.   

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The U.S. economy has averaged 586,000 jobs gained per month this year, according to the report released on Friday. 

On Friday, President Biden also blamed surging COVID-19 cases nationwide for the lackluster August jobs report. While he conceded the White House wanted to see a "larger number," he maintained the labor market's recovery from the pandemic is "durable and strong." 

Last month, following the release of July’s jobs report, which revealed employers hired more workers than expected, Walsh argued that there was "no indication at all" that ending extended unemployment benefits in some states before this month’s expiration "has added" to the report. 

On Friday, he clarified that when he initially made that comment "we only had, I think, about a week or so of data to look at the information … and we saw no increase in labor participation in those states that ended unemployment benefits." 

The enhanced unemployment benefits designed to help people get through the pandemic is set to expire on Labor Day. 

About half of all states chose to put an end to the extra aid before this month’s deadline, with some governors arguing that those boosted benefits discouraged people from getting back into the workforce. 

Walsh told DeAngelis on Friday that he believes that as the school year begins and more children head back to classrooms, "we’re going to have an opportunity to get more people back into the job market … as long as we continue to keep this delta variant under control." 

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FOX Business’ Jonathan Garber and Megan Henney contributed to this report.