Hawaii’s labor market proved to be resilient in the face of the surging COVID-19 virus as the unemployment rate in July plunged to a 16-month low of 7.3% and nonfarm payroll jobs jumped by 10,200 over the previous month.

The seasonally adjusted jobless rate declined four-tenths of a percentage point from 7.7% in June and has now fallen for six consecutive months, according to data released Thursday by the state Department of Business, Economic Development and Tourism.

As recently as May 2020, the state’s unemployment rate stood at a record 21.9% during the early stages of the COVID-19 pandemic. The last time the jobless rate was lower than 7.3% was in March 2020 when it was at 2.1% during the pandemic’s infancy.

“The numbers indicate that Hawaii’s labor market continues to improve,” DBEDT chief economist Eugene Tian said. “Employment in July was the highest since March 2020, and the unemployment rate was the lowest since the same month. Given the current trend, the unemployment rate may reach 6.0% by the end of this year if there are no lockdowns.”

Tian said if lockdowns are reinstated, the economy could suffer another blow.

“There is very high uncertainty in the labor market and the overall economy due to the surge in delta virus numbers,” he said. “The last surge in Hawaii was September 2020, and our unemployment rate increased from 14.1% in August to 14.8% in September due to the second lockdown on Oahu. The unemployment rate might go up if another lockdown is implemented, but hopefully, it is short-term, similar to last September.”

Hawaii’s jobless rate still trails the U.S. rate, which fell in July to 5.4% from 5.9%. However, Hawaii no longer has the distinction of having the highest unemployment rate in the country. As of June, New Mexico and Connecticut both had rates of 7.9%, with Nevada in third at 7.8%. The U.S. Department of Labor will release the July numbers for all the states today.

In July’s unemployment data, Hawaii’s labor force — which includes those who are employed, those who are unemployed but actively seeking work and those who are self-employed — slipped to 646,000 from 646,150 in June.

The number of people employed rose to 598,850 — the highest since March 2020 — from 596,500.

Those unemployed declined to 47,200, the lowest since the beginning of the pandemic, from 49,650.

With domestic tourism rebounding, the state’s leisure and hospitality sector continued gaining momentum as job growth rose in July by 2,500 over June to represent a significant portion of the 10,200 gain in nonfarm payroll jobs. It was the sixth straight month that the sector had increased from the previous month. In July, visitor arrivals recovered to 89.1% of the July 2019 level.

Government employment jumped by 6,000 jobs in July, primarily due to the listing of positions that were frozen during the pandemic in fiscal year 2021. The state government started to fill positions in July at the start of the new fiscal year.

Nonfarm payroll jobs are calculated from a mail survey of employers and are considered a better indicator of job growth because there is a larger sample size than the labor force data, which is compiled from a telephone survey of households.

The unemployment rate declined in the state’s four major counties in July from the previous month. State and national labor force data is adjusted for seasonal factors, but the county jobs data does not take into account variations such as the winter holiday and summer vacation seasons.

Honolulu County’s jobless rate fell to 6.2% from 7.1%, Hawaii County’s rate dropped to 6.9% from 7.9%, Kauai County’s rate decreased to 9.6% from 11.2% and Maui County’s rate sank to 9.2% from 10.6%. In Maui County, Maui’s rate fell to 9.3% from 10.8%, Molokai’s rate declined to 8.5% from 8.8% and Lanai’s rate edged down to 3.8% from 3.9%.