Jobless rate in U.S. dips to 11.1%
But employment claims now have exceeded 1 million for 15 straight weeks
WASHINGTON — The economy added 4.8 million jobs in June, based on a survey taken in the middle of the month, sending the unemployment rate down to 11.1 percent — a sign of how many businesses were scrambling to emerge from the depths of the recession.
The stock market rose sharply on the news, with the Dow Jones Industrial Average up about 400 points, or 1.5 percent.
But data also released Thursday by the Labor Department showed that 1.4 million people filed unemployment claims for the first time last week, as many businesses reversed themselves and closed again during the surge in coronavirus
cases.
This trend has not fallen off in recent weeks.
This marked the 15th straight week of unemployment claims that exceeded 1 million, a sign that the economic recovery has not taken hold for many Americans.
At a news conference shortly after the information was released, President Donald Trump said the numbers showed the economy was “roaring back, coming back extremely strong.”
The data bring into sharper focus the turmoil facing the economy after many businesses sent workers home in March during the beginning of the spike in deaths caused by the virus.
Many companies began rehiring in May and June, but there still are more than 14 million people who lost their jobs during the crisis and have not been rehired.
“It’s good news, but the pandemic pushed us into a very deep economic hole, and we’re crawling out and it’s a long way to go,” said Mark Zandi, chief economist at Moody’s Analytics. “We can certainly fall back.”
Federal and state officials have stumbled during reopening plans, and now some of the states that reopened the fastest are seeing a large spike in coronavirus cases that are causing them to backtrack swiftly, leading to new job losses.
In last month’s report, there was
a particular focus on a misclassification error the Bureau of Labor Statistics said it made that marred how it calculated the unemployment rate. On Thursday, it said that issue had been mostly fixed.
The bureau said the true unemployment rate probably is closer to 12.1 percent, 1 percent percentage point higher than the official rate it gave.
Last month, it said the unemployment rate was 13.3 percent, but the data collection error had artificially lowered it from 16.3 percent. The disconnect stems from the way surveyors interview people about their job status, as many Americans are unclear about whether they actually have been laid off or just sent home temporarily.
The official unemployment rate remains one of the highest the nation has experienced since the Depression era.
The strong month was driven by robust hiring in the leisure and hospitality sector, with 2.1 million additional jobs added, accounting for about 40 percent of the total gained for the month. Food services and drinking establishments saw their payrolls swell by 1.5 million people, but they still remain 3.1 million lower than before the pandemic.
These are the industries that are getting hit hard in the past two weeks by new closings, as a numbers of states shuttered bars and restricted restaurant service as they try to get the case surge under control.
There are other strains on the economy. Only a third of the 22 million Americans who lost their jobs in March and April have returned to work so far.
The new unemployment claims, a different measurement that has stagnated around 1.4 million to 1.5 million a week during the past month, remain well above prepandemic records, pointing to the magnitude of the crisis.
With the supplemental insurance given to gig and self-employed workers, that number remained well over 2 million last week.
“I would take solace with these numbers, but I wouldn’t pop any champagne,” Zandi said. “It’s 10 times what you would see in a wellfunctioning economy.”
The number of people who reported permanently losing a job rose by 588,000 in June, bringing the total since February to 2.9 million.
At the start of the pandemic, most workers believed that they would be rehired quickly, but as the deadly virus continues to be a danger, more and more businesses are telling workers they never will get their old job back.
Federal lawmakers continue to wrangle over proposals that would continue or extend some of the emergency unemployment benefits that will run out by the end of July. Democrats and the White House are at odds over how to authorize the funds even though there are large numbers of people still out of work.
White House officials told outside advisers Thursday that the jobs report makes it less likely they will approve legislation that would cost as much as $2 trillion or $3 trillion, according to Stephen Moore, a conservative close to the White House.
Moore said the jobs report also is likely to shore up White House opposition to extending the significant increase in unemployment benefits approved by Congress in March.
Trump and Treasury Secretary Steven Mnuchin talked Thursday about providing more money for businesses and schools, but Mnuchin said they had not decided what to do for households.
“There will be a phase four, but this makes the case in their eyes for a smaller one and makes even stronger the case for not extending the unemployment benefits,” Moore said. “You don’t have the sense of crisis you did a few weeks ago.”
Still, others remain concerned by a new wave of shutdowns and signs of permanent job losses.
“On the whole, it’s a positive report,” said Jason Pye, legislative affairs director at FreedomWorks, a conservative think tank. “But you’re probably looking at another wave of shutdowns — and that’s going to bolster stimulus talks.”
One month ago, Trump had used the May jobs report to tout a nascent recovery. That report had seen the jobless rate drop to 13.3 percent from April’s rate of 14.7 percent. Some White House advisers think Trump’s political future is tied to an economic recovery, though Trump remains fixated on the stock market’s performance.
“There’s not been anything like this,” Trump said Thursday morning. “All of this incredible news is the result of historic actions my administration has taken.”
The economy’s gyrations continue. Conditions have deteriorated markedly in the past few weeks, though it’s unclear how much of that will be reflected in the new jobs data.
The U.S. unemployment rate is likely to remain above 10 percent through the end of the year, Mary Daly, president of the Federal Reserve Bank of San Francisco, said Wednesday. Even in the best-case scenario, she warned, it’s likely to take four to five years for unemployment to return to low levels.
“I would hesitate to call this a recovery,” she said. “The longer the virus is with us, the more permanent job separations occur.”
The economic swings in the past few months have been sudden and severe, and the jobs report will give a snapshot of the labor market a few weeks ago.
The numbers are, as always, imperfect. There’s no precedent for the government to try to tabulate unemployment figures that are this high and move around this much.
The monthly jobs report is based on a survey taken during one week of the month in question — in this case, the week ending June 12, before the rising number of coronavirus infections reached their current level.
State officials still are struggling to help people navigate the unemployment claims process and to deal with backlogs and delays.
Many analysts predicted that the economy added about 3 million jobs in June, which would have brought the unemployment rate down to 12.2 percent. The job losses in April were devastating, as more than 20 million people lost their jobs that month.
Even with new jobs added, there are troubling signs on the horizon. The new rise in infections, which has surged to the highest daily total of the entire pandemic, has touched off a wave of restrictive measures that will close down many local businesses that had just begun to reopen.
In recent days, Texas shut down all bars just weeks after they had reopened. California announced the closure of bars and indoor dining in 19 counties, more than 70 percent of the state. And at least nine other states have slowed or reversed their reopenings.
Restaurant bookings have begun to sink in hard-hit states such as Texas, Florida and Arizona. Job postings on the Indeed website, though up from a low of 39 percent, are still down 24 percent from last year.
Many workers are starting to report being laid off or furloughed for a second time in just a few months. But those effects will not be captured in these reports for the most part.
There are some positive indications about the country’s reopening. Data gathered by human resources software company Kronos on 30,000 private industry businesses and 3.2 million hourly workers found that businesses had by the end of last week recovered more than half — 59 percent — the work shifts they lost between March and April.
Even in places where coronavirus cases are surging, more workers clocked in in the last week of June than at the beginning of the month.