The US labor market made greater progress than expected last month digging out of a deep hole, yet optimism over the rebound was tempered by stubbornly high layoffs and a resurgent COVID-19 outbreak across the nation.
Thursday’s simultaneous release of the monthly employment report and the weekly jobless claims data offered diverging snapshots of the economy: one reflecting a flurry of rehiring — particularly at restaurants and retailers — as state economies reopened; the other reflecting a jump in new virus cases, which has led many of those same states to halt or even walk back reopening plans.
While US President Donald Trump said the jobs figures proved the economy is “roaring back,” the pace of recovery might slow or even stall if employers grow cautious and delay rehiring workers — some have already been laid off a second time.
Photo: Reuters
Paired with the coming expiration of the federal government’s extra US$600 in weekly unemployment benefits, the economy could take another hit in the months ahead.
Even a decade from now, the jobless rate would still be above pre-pandemic levels, according to Congressional Budget Office projections released on Thursday.
“No one should be expecting we’re on a straight trajectory higher,” BMO Capital Markets senior economist Jennifer Lee said.
Initial jobless claims are the “worrying part” of Thursday’s figures, and “it’s going to be a few steps forward and a couple steps back,” she said.
Payrolls rose by a more-than-expected 4.8 million last month after an upwardly revised 2.7 million gain in the prior month, US Department of Labor figures showed.
The data, which offer a snapshot of mid-month conditions, also showed the unemployment rate fell for a second month to 11.1 percent. That was a bigger decline than anticipated, but the rate still remains far above the pre-pandemic half-century low of 3.5 percent.
Meanwhile, a separate weekly report showed initial applications for unemployment benefits in state programs remained extremely elevated last week, falling by less than expected to 1.43 million new applications. Continuing claims — or claims for ongoing unemployment benefits in state programs — rose slightly to 19.3 million in the week ended June 20.
The increase in payrolls was led by leisure and hospitality and retail, illustrating the effect of the easing of business restrictions. Healthcare also saw increases, as doctors’ and dentists’ offices reopened.
It’s a “little more disconcerting that we’re not seeing broad-based gains across industries,” Lee said.
Also, state government payrolls fell by another 25,000 — the fourth straight decline — as budget situations grew more dire amid falling tax revenues.
Beneath the headline numbers are even bigger underlying trends. About 17.8 million Americans remain unemployed, down from 23.1 million in April, indicating that only about a third of the jobs lost during the pandemic have been recovered.
Former US vice president and Democratic presidential hopeful Joe Biden said on a livestream on Thursday that the positive jobs report does not compensate for the scale of the health crisis.
“There is no victory to be celebrated,” he said. “We’re still down nearly 15 million jobs, and the pandemic is getting worse, not better.”
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