07.02.2020
Economy regains 4.8 million jobs in June and unemployment at 11.1 percent
Unemployment fell and the U.S. economy added back 4.8 million jobs in June according to the latest Employment Situation report issued by the U.S. Bureau of Labor Statistics on July 2. This follows a gain of 2.7 million (revised up by 200000) in May. U.S. employers have added back 7.5 million jobs of the 22.2 million jobs lost since the onset of the coronavirus pandemic in February sparking hopes for a faster rebound in the labor market.
The unemployment rate fell to 11.1 percent from 13.3 percent in May; though this still understates the actual drop since the number of people misclassified as unemployed fell from 3.0 percent in May to 1.0 percent in June. More importantly June figures were collected before a surge of coronavirus infections in several large states including Florida Texas Arizona and California causing many officials to reimpose some restrictions introduced during initial lockdowns.
The job gains were primarily in sectors most affected by the lockdown. Leisure and hospitality jobs increased by 2.1 million accounting for about two-fifths of the gain in total nonfarm employment. Restaurants and bars jobs rose by 1.5 million; despite these gains employment is down by 3.1 million since February. Jobs were also returning to amusements gambling and recreation; and in accommodations. Employment in retail trade rose by 740000 in June after a gain of 372000 in May; on net the industry is 1.3 million lower than in February.
Employment gained across major services sectors including education and health services (568000); other services (357000); professional and business services (306000) transportation and warehousing (99000) wholesale trade (68000); and financial activities (32000).
On the goods producing side manufacturing employment rose by 356000 jobs in June; still down by 757000 since February. Construction hired back 158000 workers in June; following a gain of 453000 jobs in May. These gains accounted for more than half of the decline of 1.1 million occurring in March and April. Mining continued to lose jobs (-10000) in June; mining is down by 123000 since its peak in January.
Government employment gains were modest (+33000) in June; overall employment in government is 1.5 million below its February level. This figure may increase sharply as governments enter their new fiscal year with massive revenue-cost imbalances unless Congress appropriates direct assistance.
The diffusion index of employment—a measure of the dispersion of change—increased to 75.2. This broad-based index provides insight into the breadth of employment change across 258 different private sectors.
On the household side the picture is reinforced by a strong but uneven rebound. People who were earlier on temporary layoff are getting their jobs back. In April 18.6 million were furloughed; in June it is now down to 10.6 million; accounting for about three-fifths of all unemployed. In addition the number of unemployed who are reentrants rose sharply from 1.5 million in April to 2.4 million in June. These represent significant positives in the labor market. However more than 4.6 million people have dropped out of the labor force since February. About 1.9 million of those that left the labor market were under the age of 25 years. Nearly 1 million of those workers are prime-age (between 25-64 years) women. Another 900000 workers over the age of 65 years left the work force.
The overall employment-to-population ratio (EPOP) is down by 6.5 percent since February. For minorities the decline is much greater; for Blacks it is down by 8.6 percent; for Hispanics by 10.3 percent; and for Asians the EPOP is down by 9.9 percent.
In sum this is a mostly positive report indicating that the economy is on the rebound; though there is a long path of recovery. With additional funding needed from Congress for the unemployed and for state and local government finances and the resurgent pandemic in several states the recovery may stall.
The full BLS press release on the June 2020 employment situation can be accessed in the link below:
The next Employment Situation for July 2020 is scheduled to be released on Friday August 7 2020.
