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US health sector's job growth slows with 797,000 total lost since February

After rebounding from losing 1.4 million jobs in April and adding over 300,000 jobs in both May and June, the healthcare industry slowed to just 125,500 additions in July.

The month's gains were once again led by 126,200 additions in ambulatory healthcare services, according to an Aug. 7 report from the U.S Bureau of Labor Statistics. Offices of dentists and physicians had gains of 44,800 and 25,900, respectively, while offices of other health practitioners added 22,200 jobs.

Since February, the healthcare sector is still down 797,000 jobs despite three straight months of growth, according to the BLS.

The industry performed in line with expectations, with growth across most of the sector and a slowdown after large increases in May and June, Dante DeAntonio, an economist at Moody's Analytics, said in an interview.

"We saw the big rebound already happened, and now we're looking more for incremental improvements," he said. "I don't think we're going to get those huge jumps that we saw in May and June again at this point."

As the recovery slows, it could be one or two years before the final couple hundred thousand jobs return to the sector, according to DeAntonio.

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While the healthcare industry's growth slowed down, an increase in hospitals' payroll is a bright spot for the sector, DeAntonio said.

Hospitals added 27,400 jobs in July, up from the 2,100 added in June. The sub-industry has been one of the slowest to recover after declines of 126,200 and 35,100 in April and May, respectively, as elective care was largely shut down across the country.

The sub-industry's growth was "very small relative to the size of that segment," but the increase was the first real movement in the subsector, according to DeAntonio.

Three top U.S. for-profit hospital companies HCA Healthcare Inc., Universal Health Services Inc. and Tenet Healthcare Corporation each reported on second-quarter earnings calls that procedure and admissions volumes improved over May, June and July, with July seeing nearly pre-pandemic levels.

However, after a rebound in the second quarter, executives for the hospital companies are seeing COVID-19 cases resurge and new hot spots emerge in their markets, which could affect the return of elective care.

Hospitals and the overall healthcare industry were protected a bit from cases spiking in July as elective care continued and there were not any broad shutdown orders, which should also help hospitals' payrolls going forward, DeAntonio said.

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Unlike the hospital sector, nursing and residential care facilities continue to see declines, with 28,100 additional jobs lost in July.

Losses for the subsector may be partially due to a slower impact from the pandemic, DeAntonio said.

"The initial decline in payrolls was very, very small relative to the broader healthcare industry and relative to the broader economy," he said. "In total, nursing and residential care facilities is still down less than the overall healthcare sector and the overall economy even after those continued declines."

Also contributing to declines in the sub-industry are a drop in demand as the sector is hard-hit by the crisis and as people are keeping family members out of facilities, DeAntonio said.

Overall, the U.S. added about 1.76 million jobs to nonfarm payroll in July, and the unemployment rate fell to 10.2% from June's rate of 11.1%.

"This month represents a significant slowdown from the pace of the recovery that we saw in June, which is not good news," DeAntonio said. "But on the bright side, given a lot of the other data that's been floating around out there ... the number actually came up stronger than I was expecting."

While July's additions are a good thing and the U.S. had a third straight month of growth, total recovery could still be a ways away, according to DeAntonio.

"We were still very far in the hole in terms of total jobs that have been lost, and the pace of that recovery continues to slow," he said. "It's going to take a very long time to recover those lost jobs."