Nearly 5 Million Jobs Added in June. Time to Celebrate? Not So Fast
According to the US Labor Department June jobs report, there were 4.8 million jobs added back to the economy during the last month. This number marks the second consecutive month of significant gains after the economy collapsed in April due to the COVID-19 global pandemic.
The numbers came as a surprise to most analysts who had been expecting less robust gains. In a recent survey by Dow Jones, economists predicted that the report would show an increase of only 2.9 million jobs with an unemployment rate of 12.4%.
While this job report beat expectations, it is important to keep the numbers in a historical perspective. When comparing the June jobs to February's numbers, there is still a wide gulf of 15 million fewer jobs. While the unemployment rate dropped to 11.1% in June, this figure is still higher than any other time since World War II.
Biggest Industry Winners
It is no surprise that the jobs comeback was spurred on by the hospitality and leisure industries. The restaurant and bar sector accounted for roughly one-third of all of the job growth in June, adding 1.5 million jobs as these venues opened back up for business. Despite two months of straight gains for this sector, they are still down over three million jobs since February.
Other industries that demonstrated significant gains in job production include construction, education, health, and manufacturing.
The big loser in the crisis over the last few months continues to be the government jobs sector. While other industries are adding back jobs at record rates, the government sector only added 33,000 jobs over the last month.
When it comes to demographics, the economic downturn has affected minority groups at a much higher proportion than white workers. The unemployment rate in June for white workers was 10.1%. Conversely, black Americans saw an unemployment rate of 15.4% with Hispanics coming in at 14.5%. Younger workers are also seeing significant hardship. The unemployment rate for people between the ages of 16 and 25 was 20.7%.
Proceeding with Caution
It is important to note that most financial experts are cautioning that this report may be misleading. While it is true that the economy added a massive amount of jobs in June, that number is likely to fall in July. The June report was based on data collected as most states began significant reopenings. The data collected for the report comes from numbers during the middle of the month, just prior to when coronavirus cases began to spike and states began to roll back reopenings.
In the last few weeks, most of these states have either went backward through the phases of reopening or paused the process completely. Because of this, there is a good chance that many states will see additional job losses in the upcoming weeks.
Compounding the issue in the months ahead will be the problem of the benefits programs beginning to expire. The US CARES Act was passed at the beginning of the crisis, providing eligible workers with an additional $600 per week in unemployment benefits. This number was in addition to the usual amount awarded at the state level to qualified workers. However, this additional money is set to expire at the end of July. Unless Congress passes new legislation, millions of workers will be losing this supplemental money in just a few weeks.
In addition, there are many rent forgiveness and mortgage forbearance programs that will begin expiring soon. This could potentially leave hordes of Americans without legal recourse if they cannot make ends meet.
It is difficult to ascertain anything concrete from the last few jobs reports. A highly fluctuating economy will continue to drive this data through big changes in the months to come. However, most economists agree that it is promising that the economy is showing resilience to the unprecedented health crisis. Despite soaring unemployment rates, the stock market continues to perform relatively well, especially when you consider that the markets generally do not react favorably to uncertainty. If there is one thing certain about the COVID-19 crisis, it is that it is full of uncertainty.
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