US employers add 4.8 million jobs in June; jobless rate drops to 11.1%
Thursday, July 02, 2020
Employers added 4.8 million nonfarm jobs in June after hiring 2.5 million workers in May, according to the federal Bureau of Labor Statistics. June’s unemployment rate fell to 11.1% versus May’s 13.3%.
Improvement in the labor market for the second straight month was due to a partial resuming of economic activity after nationwide business closures, notably in the hospitality and leisure sectors in March and April, to slow the transmission of the COVID-19 pandemic. That shutdown led to the loss of 22.2 million jobs.
Most major worker groups saw unemployment rates decline in June. That continued the trend of firms hiring in May.
Elsewhere in the economy, June’s employment data showed mixed results. “The number of unemployed persons who were on temporary layoff decreased by 4.8 million in June to 10.6 million,” according to the BLS, “following a decline of 2.7 million in May. The number of permanent job losers continued to rise, increasing by 588,000 to 2.9 million in June.”
In June, all private nonfarm workers’ average hourly earnings dropped by 35 cents to $29.37 versus May’s decline of 29 cents to $29.75, according to the BLS. For all workers on nonfarm payrolls, June’s workweek hours fell by 0.2 of an hour to 34.5 hours versus May’s rise of 0.5 of an hour to 34.7 hours.
Small firms of 1-49 workers led the way in hiring, gaining 937,000 jobs in June after losing 435,000 in May, according to ADP/Moody’s monthly employment report, which counts nonfarm private-sector payrolls exclusively. Large firms of 500 or more workers added 873,000 workers in June versus May layoffs of 1.6 million employees. Midsize firms of 50-499 workers hired 559,000 new workers in June after shedding 722,000 jobs in May.
Goods-making firms gained 457,000 new workers in June following 794,000 layoffs in May. In the service sector, employers hired 1.9 million workers in June compared with May’s job losses of 1.97 million. Leisure and hospitality employers, which bore the brunt of coronavirus business closures, added 961,000 workers after 105,000 employees were let go in May.
Ahu Yildirmaz is the co-head of the ADP Research Institute. “In fact, 70 percent of the jobs added this month were in the leisure and hospitality, trade and construction industries,” she said in a statement. Some states that began reopening businesses in May and June, however, have seen surges in the pandemic and are reversing course. That will affect employment negatively moving forward.
Closely watched economic forecasts from the Congressional Budget Office released before the July 4 weekend will estimate future growth and the jobless rate.
The $600 weekly pandemic jobless benefit to standard unemployment insurance benefits will cease on July 25. “The ending will come at a huge economic cost to workers, their families, and the recovery,” according to Elise Gould, a senior economist at the Economic Policy Institute in Washington, D.C.
In addition, a deficit of federal help for cash-strapped state and local governments will slow an economic recovery. States and municipal governments are unable to run budget deficits. The federal government can and does run such deficits.
In June 30 testimony before the House Committee on Financial Services, Jerome Powell, head of the nation’s central bank, sounded a cautious note. “The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus. A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.”
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