US added 850K jobs in June as companies scrambled to staff up
The US added 850,000 jobs last month as Americans continued to emerge from the pandemic and businesses scrambled to hire new workers, the feds said Friday.
June’s numbers topped economists’ expectations of 706,000 jobs added, and come after the country added 559,000 jobs in May.
The unemployment rate unexpectedly ticked up to 5.9 percent in June from 5.8 percent in the month prior, according to Friday’s much-anticipated jobs report from the Bureau of Labor Statistics. That’s far higher than the 50-year low of 3.5 percent reported in February of last year, before the pandemic gutted the economy.
Economists surveyed by Dow Jones expected to see the unemployment rate fall to 5.6 percent.
As overall hiring picked up, wages also increased in June, as expected.
Average hourly earnings increased to an all-time high $30.40 per hour, up 0.33 percent from May, and 3.57 percent compared with a year ago.
The record rate of pay rose from $29.35 a year ago and $28.51 pre-pandemic, Axios reported.
“The data for recent months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages,” the feds said, adding that wage data has been distorted during the pandemic, making it difficult to come to conclusions about long-term trends.
“We got some early fireworks in the jobs report as the numbers blew past expectations,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said.
He added that “the economy is clearly on the mend and momentum is beginning to build in the labor market.”
By sector, leisure and hospitality, the part of the economy hit hardest by the pandemic and subsequent government restrictions, saw the most gains, adding 343,000 jobs, with more than 194,000 coming from restaurants and bars.
Education also saw big gains, adding 269,000 across the board. Retail added 67,000 jobs after declining slightly in May, while social assistance added over 32,000 new jobs in June.
Professional and business services increased by 72,000, and manufacturing gained 15,000.
Transportation and warehousing added almost 11,000 while wholesale trade picked up more than 21,000.
Notably, construction lost 7,000 positions on top of a decline in May, as well.
Matt Peron, director of research at Janus Henderson Investors, said Friday’s report “more closely aligns with the re-opening story in the US.”
“It confirms that the economy continues to heal at a steady clip,” he added.
Still, about 9.5 million remain unemployed, the feds added, far higher than the 5.7 million unemployed in February 2020. The number of people who have been unemployed for 27 weeks or more rose by 233,000 to 4 million, following a decline of 431,000 reported for May.
The labor force participation rate remained largely unchanged, but Curt Long, chief economist at the National Association of Federally-Insured Credit Unions, noted that it was “weighed down by a large outflow of teenagers.”
“Workers age 20 and over saw decent gains in participation,” he said. “Progress is happening but it remains slower than the optimists had hoped.”
Long noted that even though the headline jobs number beat economists’ expectations, it’s still not where the country had hoped to be at this point in the recovery. He added that the US has yet to add a million new jobs in a month, which is what he had hoped to see in the spring.
“It’s a solid report. I think it’s a little disappointing that we’re still not hitting those numbers that we thought we would get to in March, April,” he said in an interview. “It kind of depends on your constitution. Are you a glass half full or half empty kind of person?”
Hiring was not nearly as robust as many economists expected through the spring. The jobs report disappointed in both April and May even as job openings soared to a record 9.3 million.
Many economists have said they’re not yet concerned about the economic recovery, predicting that job gains have just been pushed off into the summer rather than the spring as initially expected.
But others have said the pandemic may have fundamentally restructured the US labor market and many of those who left work over the past 18 months don’t plan to return to their old jobs.
The new federal data follows a report Wednesday from payroll processing firm ADP that showed companies hired 692,000 workers in June.
And on Thursday, the Labor Department issued new data that showed weekly new jobless claims fell to 364,000 last week, marking a new pandemic low even as nearly 3.5 million Americans remain on traditional state unemployment benefits.
Taken together, the data offer some hope that the nationwide labor crunch is easing, at least in some sectors, and it also shows that the labor market recovery is meeting expectations of a rapid rebound early this summer.
Many business owners, Republicans and economists have blamed pandemic-boosted federal unemployment benefits for causing the labor shortage, saying that the unemployment payout keeps workers at home while businesses go understaffed.
In addition to the federal unemployment program, other reasons for the labor crunch include fear of getting COVID-19 and school closures keeping parents at home, economists say.
A handful of states have now cut unemployed people off from pandemic-boosted federal unemployment benefits, which give unemployed workers an extra $300 per week.
Alaska, Iowa, Mississippi and Missouri all ended the federal program on June 12, about three months before it is set to expire.
Another eight states ended the program on June 19.
In total, at least 25 states are looking to lure workers back into the labor market by withdrawing from the federal program.
President Biden confirmed last month that he would let the federal unemployment benefits program expire after Labor Day.
The White House has defended the extra benefits, saying that businesses should pay people more.
But many economists are growing increasingly worried about wage inflation driving prices further up. Companies have already begun raising prices, blaming higher labor and supply costs.
Chipotle, for example, has said it raised its menu prices by up to 4 percent to cover the costs of higher wages for employees. Executives from other major companies, including General Mills, Unilever and JM Smucker, have also warned recently about rising costs and inflationary pressures.
Shoppers are bearing the brunt of rising prices, with the costs of everything from apparel and cars to bacon and milk spiking.
