Job growth slowed sharply in August as COVID-19 spread

Hiring across the U.S. pulled back dramatically in August as a surge in COVID-19 cases caused by the Delta variant dragged down the recovery.

Employers added 235,000 jobs last month, the Labor Department reported on Friday, far fewer than the roughly 700,000 expected by forecasters. The nation's unemployment rate fell to 5.2%, from 5.4%.

The monthly job gains are a big drop from July, when more than 1 million jobs were created, according to revised government data.

"The labor market recovery cooled markedly in August as businesses and job seekers grew more cautious in the face of the fast-spreading Delta variant," Lydia Boussour, lead U.S. economist with Oxford Economics, said in a report.

Customer-facing industries were hardest hit in August, with retail trade losing 28,000 jobs and leisure and hospitality staying unchanged. But the goods economy powered ahead: Transportation and warehousing added 53,000 jobs and manufacturing added 37,000, a majority of them in the auto industry. Professional and business services added 74,000 jobs.