U.S. Economy Gains Record 4.8 Million Jobs in June to Beat Expectations, Extend Pandemic Rebound

What’s the story?

• The Bureau of Labor Statistics (BLS) on Thursday released its jobs report for June 2020, which found the U.S. economy added 4.8 million jobs and the unemployment rate declined by 2.2% to 11.1% as states continued to reopen their economies from the lockdowns imposed to slow the coronavirus (COVID-19) pandemic and workers returned to their jobs.
• The one month job increase is the largest in U.S. history since at least 1939, surpassing May’s record setting gain of 2.7 million jobs which was revised up from an initial report of 2.5 million jobs added. The June jobs report exceeded economists’ expectations, as a Dow Jones survey forecast a gain of 2.9 million jobs & unemployment rate of 12.4%, according to CNBC.
• While the second consecutive month of bigger than expected jobs gains is welcome news, it also underscores how far the economy has to go to return to its pre-pandemic highs, which featured an unemployment rate near 3.5% that equaled a 50-year low. The economy lost 22.2 million jobs combined in March & April ― so the gains of 7.5 million jobs in May & June represent about 34% of those lost earlier in the year.
• President Donald Trump praised the June jobs report in a news conference as “spectacular news for American workers and American families and for our country as a whole.” He also touted the “historic” monthly jobs gains for Blacks (+404,000) & Hispanics (+1.5 million) as being “a record by a lot”, and that unemployment among those without a high school diploma “dropped a full 3.3 percentage points; that’s the largest drop in recorded history.”

Jobs Report Breakdown by Sector

• Leisure & hospitality added 2.1 million jobs in June, representing roughly two-fifths of the total increase. Employment in food services & drinking places rose by 1.5 million after a similar increase in May, but despite the gains the sector is still 3.1 million below its February level.
• Retail employment rose by 740,000, roughly doubling May’s increase which left the sector 1.3 million jobs below its February level.
• Education & health services added 568,000 jobs, with healthcare (+358,000), dentists (+190,000), and social assistance (+117,000) leading the gains. June’s increase leaves the sector 1.8 million below its February level. Employment in the other services industry increased by 357,000, led by personal & laundry services (+264,000), leaving the sector down 752,000 jobs from February.
• Manufacturing added 356,000 jobs in June, with motor vehicles & parts (+196,000) leading the sector’s gains. The increase puts the sector 757,000 jobs below its February level.
• Professional & business services added 306,000 jobs in June, led by temporary help services (+149,000) & building/dwelling services (+53,000). The sector’s employment is now 1.8 million below its February level.
• Construction added 150,000 jobs in June after a gain of 453,000 in May, which combined to account for half of the decline in March & April (-1.1 million combined).

Demographic Unemployment Information

• Unemployment rates declined in June for adult men (10.2% from 11.6% in May), adult women (11.2% from 13.9% in May), and teenagers (23.2% from 29.9% in May).
• Unemployment rates also declined in June among Whites (10.1% from 12.4% in May), Blacks (15.4% from 16.8% in May), Hispanics (14.5% from 17% in May), and Asians (13.8% from 15% in May).

Revisions & Data Notes

• Employment in April was revised down by 100,000 from a loss of 20.7 million jobs to a loss of 20.8 million jobs.
• Employment in May was revised up by 190,000 from a gain of 2.5 million to a gain of 2.7 million.
• The BLS noted that the degree of misclassification declined in June was much smaller than in prior months. The misclassification hinges on a question about the main reason people were absent from their jobs, with people absent due to temporary, pandemic-related closures recorded as absent due to “other reasons” as opposed to unemployed due to temporary layoff. 
• If those workers classified as absent due to “other reasons” had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 1% higher than reported, but BLS notes that this “represents the upper bound of our estimate of misclassification and probably overstates the size of the misclassification error.”
• According to usual practice at the BLS, data is accepted as recorded in the household survey. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.

— Eric Revell

(Photo Credit: iStock.com / Lorado)