US labor market builds on gains
4.8m new hires push June jobless rate down, but virus surge tempers optimism
The US unemployment rate dropped in June for the second straight month amid reopening efforts, indicating an improvement in the hard-hit labor market. But with the recent uptick in COVID-19 cases, analysts said the road to recovery might not be a smooth one.
Employers in the United States added 4.8 million jobs last month, pushing the nation’s unemployment rate down to 11.1 percent, the US Bureau of Labor Statistics, or BLS, reported on Thursday.
The rate had soared to a postwar record of 14.7 percent in April, as COVID-19 ravaged the economy. It declined slightly to 13.3 percent, as businesses gradually reopened across the country.
US President Donald Trump hailed the data released on Thursday, but continued to downplay surging COVID-19 cases that could reverse the tentative recovery in the US, which has seen the world’s worst outbreak with more than 128,000 deaths and new infections now above 50,000 a day.
Jay H. Bryson, acting chief economist at Wells Fargo Securities, wrote in an analysis: “Nonfarm payrolls rose by more than expected in June while the unemployment rate fell considerably.” He also noted that the labor market “still has a long way to go” to recoup the 22 million jobs lost in March and April.
Also on Thursday, the US Labor Department reported that 1.4 million US citizens filed a first-time claim for unemployment insurance for the prior week, the 13th weekly decline in a row but still a historic high.
That drop was offset by an increase in pandemic unemployment assistance claims, which rose almost 840,000, according to Diane Swonk, chief economist at Grant Thornton, a major accounting firm.
“This is no time to pop Champagne corks,” Swonk wrote in a blog. “That is still nearly double the drop in jobs we experienced during the Great Recession.”
Noting that the BLS survey was conducted during the week of June 12, she said: “The hole is still deep while prospects for continued gains in July have faded with a resurgence in COVID-19 cases and hospitalizations.”
Mary Daly, president of the Federal Reserve Bank of San Francisco, said the unemployment rate is likely to stay above 10 percent for the rest of 2020.
“I would hesitate to call this a recovery,” she told The Washington Post. “The longer the virus is with us, the more permanent job separations occur.”
Hasty efforts to reopen
Several US states, mostly in the South and West, have recently seen an uptick in COVID-19 cases as businesses continue to resume operations, casting a shadow over the current path to reopening.
Public health experts believe that states’ hasty efforts to reopen their economies, weeks of nationwide protests over the death of unarmed black man George Floyd, as well as some people’s unwillingness to practice social distancing or wear a mask, have all contributed to the recent surge in cases.
On Thursday, the US Centers for Disease Control and Prevention reported an increase of 54,357 cases across the country, which set a single-day record. Florida on Thursday reported 10,109 new cases, marking a single-day record for the state.
“With the number of COVID-19 cases accelerating and some states delaying reopening or imposing new restrictions, we are concerned that a significant number of individuals may become furloughed again,” Bryson wrote.
More than 10 states, including Arizona, Florida, North Carolina and Texas, have rolled back or paused reopening plans. Texas, for example, announced more than a week ago that it would close bars and reduce restaurant occupancy.
Swonk said this summer will be a struggle for recovery in employment, calling on the US Congress to provide extensions to unemployment insurance and roll out additional aid.
“This is not the time for a victory lap,” she said. “We need to prepare for what we know is in the pipeline, which is not pretty.”