US hiring jumped by 4.8m in June

Unemployment rate falls to 11.1% as economy rebounds from virus, but new cases add risk

US employers added 4.8 million jobs in June — the largest gain in history — and the unemployment rate dropped to 11.1 percent as the economy continued to rebound from the coronavirus pandemic, the Labor Department reported Thursday.

Economists surveyed by Dow Jones expected 2.9 million new jobs to be added and the unemployment rate to decline to 12.4 percent.

The unemployment rate was 13.3 percent in May and 14.7 percent in April.

“Today’s announcement proves that our economy is roaring back,” US President Donald Trump said at a news conference after the latest employment numbers were made public. “These are historic numbers.”

The Labor Department said, “These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain it.”

The record number of jobs added in June followed the 2.7 million hired in May, a total revised up by 190,000.

But the Labor Department’s survey may not fully reflect the recent resurgence of COVID-19 in some regions of the nation, which could slow the recovery.

Arizona, Florida and Texas have reversed decisions to allow some businesses to reopen while other states, including California and New York, remain cautious and have delayed the reopening for some businesses.

Nevertheless, June’s rebound was strong, and the total far exceeded the estimates of a private survey.

Researchers at ADP and Moody’s Analytics, who review the monthly payroll data of private companies to assess the condition of the labor market, expected the economy to add 2.4 million jobs in June.

Despite job gains, 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.”

Stephanie Aaronson, vice-president and director of economic studies at the Washington-based Brookings Institution, wrote in a post Thursday that the “economy is still suffering”.

“Even though the unemployment rate has come down, unemployment is still close to where it was during the worst of the Great Recession,” she said.

“There are still 15 million fewer jobs in the US in June than there were in February..”

Marianne Wanamaker, an economist at the University of Tennessee who previously served in the Trump administration, offered a different view.

“We’re at the beginning of a slow recovery,” she told The Wall Street Journal. “I think the recovery will stall out if we don’t get control of the virus.”

Jason Furman, a senior researcher at the Peterson Institute in Washington, and researcher Wilson Powell III said the course of the US economy is tied to the coronavirus.

“The future prospects of the job market will depend on the trajectory of the virus,” the researchers said.

“Some states took action to slow or partially reverse their plans for reopening at the end of June as cases rose. The further policy response (will depend) on how many people without jobs can quickly connect with their old jobs instead of undertaking the timeconsuming process of finding a new job, or even a job in a new industry.”

Despite June’s strong job numbers, there are likely to be bumps ahead.

“There are a lot of unknowns and it would be silly on the fiscal side to pull back now on stimulus,” Steve Blitz, chief economist at TS Lombard, a London-based provider of investment research, told CNBC.

The strong June jobs report is likely to be a key point in the congressional debate about the next corona virus stimulus bill. Congress is expected take up the issue in August.

Democrats believe the additional $600 a week in jobless benefits, scheduled to expire at the end of July, should be continued to help those who have lost their jobs to pay their bills.

But Republicans argue that the additional benefit provides incentive for some to stay home and will slow the recovery.

The number of workers on temporary layoff declined by 4.8 million in June to 10.6 million after falling 2.7 million in May,.

However, those reporting permanent job loss increased by 588,000 to 2.883 million – the highest level in six years.

The labor force participation rate, or those aged 16 to 64 now employed or seeking work, rose to 61.5 percent, or 1.9 percentage points below February’s level, a month before state officials ordered an economic shutdown to curb the spread of the coronavirus.

The retail sector added 740,000 jobs. Education and health services added 568,000. Employment in the manufacturing sector increased by 354,000. Professional and business services gained 306,000 jobs; construction was up 158,000; and transportation and warehousing reported an increase of 99,000, the Labor Department said.

Average hourly earnings declined 1.2 percent from May, as more lowerwage workers returned, but wages were still up 5 percent from a year ago, the Labor Department said.

“Today’s announcement proves that our economy is roaring back,” US President Donald Trump said.

He said the unemployment rate for African Americans fell to 15.4 percent from 16.8 percent.

Zhao Huanxin in Washington contributed to this story.