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National employment, June 2020

There is good news in the jobs report for June.

The headline from the jobs report released yesterday by the Bureau of Labor Statistics, part of the United States Department of Labor, is that the unemployment rate fell in June as the number of people with jobs rose.

Specifically, the number of employed people rose from 137,242,000 in May to 142,182,000 in June (3.6 percent). The number of unemployed persons fell from 20,985,000 to 17,750,000 (15.4 percent). The civilian labor force rose from 158,227,000 to 159,932,000 (1.1 percent).

These numbers produced an unemployment rate of 11.1 percent, down from 13.3 percent in May. This data is from the household survey, which counts people, and these are seasonally adjusted values.

From the establishment survey, which counts jobs, the number of nonfarm jobs rose from 133,002,000 in May to 137,802,000 in June, an increase of 4,800,000 jobs (3.6 percent), seasonally adjusted

BLS has been working through an issue of misclassification or workers. This issue has been affecting monthly data starting in March. For May, BLS estimated that the misclassification produced an unemployment rate three percentage points lower than the actual. For June, BLS says the degree of misclassification has declined. If workers were correctly classified, BLS estimates the unemployment rate for June would be one percentage point higher, and describes that as the upper bound that probably overstates the true size of the error.

A few notes of caution: The BLS figures are estimates gathered by surveying a sample of households and business firms. They are subject to both sampling and nonsampling errors. BLS has told of impacts on data collection and estimation methodology due to the pandemic, and there could be errors in both.

BLS data is subject to two monthly revisions. In the June report, BLS revised the nonfarm payroll employment down by 100,000 for April, and up by 190,000 for May.

A sample of news reporting:

Stephanie Aaronson of Brookings Institution:

The report clearly showed evidence of continued improvement related to the reopening of many parts of the economy following the shutdowns precipitated by the virus. The survey of employers showed payrolls were up by 4.8 million, and the job gains were in industries that were hardest hit by the pandemic, including leisure and hospitality and health services, which includes doctors’ and dentists’ offices. There is clear evidence that firms are hiring. The unemployment rate declined, for the second month, and the labor force participation rate – the share of adults working or looking for work – rose by seven-tenths of a percentage point. These are all consistent with the economy gradually reopening in the middle of June.

But we shouldn’t extrapolate from these trends because some states have scaled back their reopening because of the uptick in coronvavirus cases. It’s unclear what the state of the job market is right now or what we’ll see when the BLS releases its snapshot of the job market for mid-July.

Wall Street Journal news:

Unemployment fell and the U.S. economy regained 4.8 million jobs in June, but the recent surge in coronavirus infections could throw the recovery off course.

The job growth followed May’s payroll gain of 2.7 million and showed people were getting back to work and the economy was healing faster than anticipated. Still, the U.S. labor market is operating with about 15 million fewer jobs than in February, the month before the pandemic struck the U.S., while the country faces an increase in coronavirus cases that has led some states and businesses to change course on reopenings.

There already are signs the economy could be affected by the virus surge that started in late June, after surveys were completed for the jobs report. Restaurant seating in several large cities declined at the end of the month and credit-card spending eased, said Sung Won Sohn, an economist at Loyola Marymount University.

Wall Street Journal editorial:

The media’s grim reapers continue to predict catastrophe from the Covid-19 resurgence, but it’s hard to read Thursday’s labor report as anything but good news. The U.S. economy beat forecasts as employers added 4.8 million jobs in June while the unemployment rate fell to 11.1% from 13.3% in May. Businesses are willing to hire, and Americans want to return to work, if government will let them. …

Liberals are casting the sunnier than expected jobs report as mostly cloudy. They say next month’s will be worse due to the state flare-ups. Ergo, Congress must extend the $600 weekly federal enhanced jobless benefit that is scheduled to lapse at the end of July. Senate Minority Leader Chuck Schumer and Oregon Sen. Ron Wyden want to tie enhanced jobless benefits to a state’s unemployment rate, but this would maintain the incentive not to work in states with already high jobless benefits and retard the national recovery.

Most Americans prefer a job to a welfare check. The virus will be around for some time, and states may need to adjust their reopenings in response to flare-ups. Texas Gov. Greg Abbott issued a mandatory mask order on Friday, which beats a shutdown. The more states can do to let Americans safely return to normal life, the better for the economy and overall well-being of the American people.

CNN Business:

The US unemployment rate fell to 11.1% as the economy added a record 4.8 million jobs in June, the Bureau of Labor Statistics reported on Thursday.

The data was far better than economists predicted, and the unemployment rate also fell more than expected. It was the second-consecutive month of growth after more than 20 million jobs were wiped out in April during the coronavirus lockdown. The reopening of the economy is easing the burden on America’s stressed labor market. …

A full job market recovery is far from certain as long as the US economy remains in its current, deep recession, and “with the spread of the virus accelerating again, we expect the recovery from here will be a lot bumpier and job gains to be more muted,” said Michael Pearce, senior US economist at Capital Economics, in a note.

America is dealing with a severe joblessness crisis and millions of people are relying on government aid to make ends meet.

The Department of Labor also reported Thursday that 1.4 million workers — more than expected — filed for first-time unemployment benefits last week. While the claims data is collected weekly, the survey for the jobs report wraps around the middle of each month.

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