Record employment growth in the United States expected in June, but masks weak job market


WASHINGTON (Reuters) – US economy likely created record jobs in June as more restaurants and bars resumed, which would provide further evidence that the COVID-19 recession was likely over , although an increase in coronavirus cases threatens the nascent recovery.

FILE PHOTO: People line up outside the Kentucky Career Center before it opens to find help with their unemployment claims in Frankfort, Kentucky, United States, June 18, 2020. REUTERS / Bryan Woolston

The Labor Department’s monthly job report, closely monitored on Thursday, would add to a data stream, including consumer spending, showing a sharp rebound in activity.

But the reopening of businesses after they closed in mid-March has sparked coronavirus infections in large parts of the country, including California, Florida and Texas.

Several states have reduced or suspended their reopening since the end of June and sent some workers home. The impact of these decisions will not appear in the employment data because the government interviewed businesses in the middle of the month.

Federal Reserve Chairman Jerome Powell acknowledged this week’s rebound in activity, saying the economy had “entered a major new phase and (had) done it earlier than expected.” But he warned that the outlook “is extraordinarily uncertain” and would depend on “our success in containing the virus”.

“As the economy reopens, many lost jobs have returned and activity has also resumed,” said Steven Blitz, chief US economist at TS Lombard in New York. “The problem is that the virus still has a big say in determining the path of recovery. ”

Non-farm payroll probably increased by 3 million jobs in June, probably the most since the government began keeping records in 1939, according to a Reuters survey of economists. Payroll rebounded 2.5 million in May after plunging from 20.687 million in April.

Despite two consecutive months of spectacular gains, employment is still estimated to be about 16.6 million jobs below its pre-pandemic level. The unemployment rate is expected to drop to 12.3% from 13.3% in May.

Employment is largely increasing as businesses re-hire laid-off workers when non-essential businesses like restaurants, bars, gymnasiums and dental offices, among others, have been closed to slow the spread of COVID-19.

Economists have attributed the bursting of employment gains to the government’s paycheck protection program, providing businesses with loans that can be partially canceled if used for wages. These funds are drying up.


In an economy that had already entered recession in February, many companies, some of which were not initially affected by the foreclosure measures, are struggling with weak demand.

Economists and industry observers say this, combined with the depletion of PPP loans, has sparked a new wave of layoffs that keep new weekly demands for unemployment benefits extraordinarily high.

A separate Labor Department report on Thursday is expected to show initial claims for state unemployment benefits totaled 1.355 million seasonally adjusted data for the week ending June 27, up from 1.48 million per week. previous, according to another Reuters survey of economists.

“Job losses are starting to bleed in other sectors of the economy, different income groups and different skills,” said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania.

The claims report is also expected to show that the number of people receiving benefits after the first week of help probably fell to 19 million in the week ending June 20, down from 19.5 million the week before. These so-called continuous claims, which are reported one week late, dropped from a record 24.912 million in early May.

For a more accurate picture of the labor market, economists recommend focusing on continuing demands and data on the total number of recipients of unemployment checks. About 30.6 million people received unemployment checks in the first week of June.

The unemployment rate, which is the most standard measure of unemployment, has been biased since March by people who incorrectly classified themselves as “employed but absent from work”. The Labor Statistics Office of the Labor Department is working with the Census Bureau to remedy this situation.

Without the misclassification problem, the unemployment rate would have been 16.3% in May instead of 13.3% and would have peaked at around 19.7% in April.

Last month’s job gains were likely concentrated in the generally low-paid hospitality and hospitality industries. The return of these workers should lead to a further drop in average wages in June. Some companies are cutting wages and hours. Average hourly wages should fall 0.7% after falling 1.0% in May. The average workweek is expected to drop to 34.5 hours from 34.7 hours.

State and local governments likely laid off more workers when faced with declining incomes and budget constraints caused by the pandemic.

“A federal government’s failure to help state and local governments and avoid income cliffs over the summer would jeopardize the recovery even more,” said Lydia Boussour, senior American economist at Oxford Economics in New York .

Report by Lucia Mutikani; Editing by Chizu Nomiyama

Our standards:Principles of the Thomson Reuters Trust.


Please enter your comment!
Please enter your name here