With this report, it feels like the labor market recovery has really found its footing. Job growth continues to accelerate and more workers are finding jobs or starting to pick up their job search. Sectors tied to the reopening of the labor market are leading the way, giving some hope that these gains can continue in the months ahead. However, the Delta variant does pose a risk to the pace of progress.

July continued the trend of accelerating jobs gains, with the three-month moving average for payroll gains moving up to 832,000 jobs in July. While local government education added a large number of jobs this month, the private sector is driving the acceleration. The 3-month moving average for the private sector rose to 676,000 jobs from 517,000. This means the rise in growth this month is not just a statistical quirk. The labor market is gaining momentum.

Another good sign in this report was a rise in employment and labor force participation rates, particularly for prime-age workers. The drop in the unemployment rate was the result of more workers finding work, as the employment-to-population ratio increased by 0.4 percentage points. That rise was even more pronounced for prime-age workers, whose employment rate rose by 0.6 points. The labor force participation rate for prime-age workers also rose, with increases for both men and women.

The labor market recovery has not hit a major speed bump yet. At the same time, no major industry sector has gotten back to its pre-pandemic employment level. Leisure and hospitality is still down 10% compared to its February 2020 level. We are still down roughly 8.6 million jobs from where we would have been absent the pandemic. Recovery at this pace or even faster would be excellent. We will just have to see what damage the Delta variant will inflict.