U.S. jobs see smallest gain in seven months amid delta spread

U.S. hiring downshifted abruptly in August with the smallest jobs gain in seven months, complicating a potential decision by the Federal Reserve to begin scaling back monetary support in the coming months.

Nonfarm payrolls increased 235,000 last month after an upwardly revised 1.05 million gain in July, a Labor Department report showed Friday. The unemployment rate fell to 5.2%.

The deceleration in hiring likely reflects both growing fears about the rapidly spreading delta variant of COVID-19 and difficulties filling vacant positions. In August, 5.6 million people reported they were unable to work because of the pandemic, up from 5.2 million a month earlier, the Labor Department said.

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The surge in infections, which has already curbed consumer activity and disrupted in-person schooling and return-to-office plans, may have led businesses to grow more cautious about hiring and dissuaded some workers from pursuing high-contact employment opportunities.

U.S. payrolls are still 5.3 million below their pre-pandemic level.

Meanwhile, the participation rate — the share of Americans who are employed or looking for work — was unchanged last month at 61.7% and remains restrained by persistent child-care challenges and virus concerns.

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Many economists and parents had pointed to September as the month when those factors would have largely abated, but the delta variant has pushed back that timeline.