a person standing in front of a storeU.S. hiring slowed sharply in August as the surging Delta variant dented the pace of the economic recovery. The U.S. economy added 235,000 jobs last month, the Labor Department said Friday, falling far short of economists’ estimates for 720,000 new jobs. Job growth last month was also down from upwardly revised monthly payroll gains of 1.1 million in July and 962,000 in June.

Though job gains are slowing, employer demand for workers persists. The unemployment rate fell to a pandemic low of 5.2% in August from 5.4% in July. Wages increased 0.6% from a month earlier and 4.3% from a year ago. Industries including warehousing, manufacturing and finance added jobs solidly in August.

Hiring last month was particularly weak in services sectors that involve in-person interaction. Employment in leisure and hospitality held steady after adding an average of 350,000 jobs a month over the previous six months. Retailers cut jobs in August. The Covid-19 Delta variant appears to be weighing on broader economic growth, including consumer spending and confidence.

“The economy is losing some steam,” said Bernard Baumohl, economist at the Economic Outlook Group, LLC. “Consumers are much more cautious about spending,” he added, saying, “A lot of businesses recognize this and are also willing to pull back on hiring.”

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