The payroll increase reported by the Labor Department in August was sharply lower than the upwardly revised 1.1 million positions added in July, but the unemployment rate nonetheless declined to 5.2 percent from 5.4 percent.
While they correctly predicted the unemployment rate, analysts had expected the economy to gain 750,000 jobs last month.
The weak hiring comes as states and business impose mask-wearing requirements and other restrictions to fend off the fast-spreading Delta variant.
“The economy can’t recover and fully reopen unless we can contain the spread of the virus – devastating,” Diane Swonk of Grant Thornton wrote on Twitter of the data.
After the economy lost millions of jobs as the pandemic started last year, Covid-19 vaccines have allowed for strong rehiring in recent months, but the report said 8.4 million people remain unemployed across the country.
There were ominous signs for the world’s largest economy elsewhere in the report.
The leisure and hospitality sector, which bore the brunt of the initial layoffs as the pandemic began, had added an average of 350,000 positions per month over the last six months, but in August it added zero positions, the data showed.
There was no improvement either in the labour force participation rate, which was at 61.7 percent in August, around the range it has hovered at for more than a year.
Industries that did add jobs last month include professional and business services, which rose 74,000, transportation and warehousing, which gained 53,000, and private education, which added 40,000. (AFP)