August jobs report reveals ‘major speed bump’ for economic recovery

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Wall Street strategists mostly agree that the worse-than-expected August jobs report wasn’t just a mild setback for the COVID-19 economic recovery, it was a major setback that warrants closer attention by investors.

“A major speed bump,” is how Bank of America economists summed up the report in a flash note to clients on Friday. “There are clear signs that the recent [surge] in the Delta variant played a key role in the weakness in the labor market.”

The U.S. economy added back the fewest jobs since January last month as the Delta variant took a greater than expected toll. Non-farm payrolls increased by 235,000 in August after rising by more than 1 million in July, the Labor Department said Friday. Economists were looking for 733,000, according to Bloomberg consensus data. The report comes on the heels of disappointing reads on consumer confidence in retail sales, which strategists blame on the influence of the Delta variant on mobility and psyche. 

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