The U.S. added 4.8 million jobs in June and the unemployment rate fell to 11.1 percent, beating economists’ expectations.
Some 7.5 million people have been brought back to work since more than 20 million jobs were shed in April. A surge in coronavirus infections, however, threatens to slow the momentum.
“The job market recovered at a much faster than anticipated pace in June, with strong job growth and a surprisingly large drop in the unemployment rate,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association.
Still, there remain 15 million fewer jobs in June than there were in February, before the coronavirus caused widespread closures in nearly every industry.
CBRE’s Global Investors head of real assets research Heidi Learner pointed out that unemployment would be closer to 12 percent were it not for counting irregularities as the coronavirus complicated unemployment measurements.
The leisure and hospitality industry hired back 2.1 million people, accounting for almost half of total employment gains. Restaurants and bars brought back 1.5 million workers in June, repeating gains of a similar amount in May, although overall employment in the sector remains 3.1 million below February levels.
Addressing Congress on Tuesday, Federal Reserve Chairman Jerome Powell seemed to forecast today’s Department of Labor report. “While this bounceback in economic activity is welcome, it also presents new challenges — notably the need to keep the virus in check,” he said.
The retail sector hired 740,000 people, doubling the gains it made in May. Employment at clothing stores increased by 202,000 and at general merchandise stores by 108,000. Home furnishings stores and vehicle dealerships each added 84,000. The industry as a whole has lost a net 1.3 million workers since February.
Hiring in construction slowed to 158,000 in June after a gain of more than 450,000 in May as workers deemed essential came back earlier than in other industries. The gains in these months account for more than half of the March and April losses.
“This report is nothing but positive for the housing and mortgage markets,” said Fratantoni. “The stronger job market will support new home purchases, as well as helping homeowners make their mortgage payments.”
In a separate report, the Labor Department said 1.43 million Americans filed new unemployment claims for the week ending June 27, a decline of just 55,000 from the prior week. The data are more current than the monthly labor report, and reflect recent closures resulting from a surge in coronavirus infections.
“I don’t want to downplay positive elements of the report”, said Learner, “but we still have a long way to go.”
For weeks, states less strict in shutting down businesses such as Florida and Texas led national job gains, while people living in states like New York and California filed more unemployment claims. But as coronavirus cases flared, Florida, Texas, and California pulled back on reopening plans, closing bars and limiting access to restaurants once again.
There are still 10.6 million people classified as temporarily laid off, said Fratantoni, “and the longer they remain out of work, the greater the risk that their situation becomes permanent.”
The total number of people claiming unemployment benefits, including special coronavirus-related funds, for the week ending June 13 was approximately 31.5 million, an increase of over 900,000 from the previous week.
For the comparable week in 2019, there were 1.58 million people claiming unemployment benefits.
Contact Orion Jones at [email protected]