The US economy added 4.8 million new jobs in June, bringing the rate of unemployment down to 11.1%. Nonfarm payrolls were expected to rise by just 2.9 million rather than the 4.8 million total, a big upside miss. The rate of unemployment also came in better than expected. However, 1.4 million Americans still filed for jobless claims benefits last week, highlighting the fact that the labor market is a long way off any form of recovery.
- Unemployment dropped to 11.1% in June vs. 12.4% expected.
- The economy added 4.8 million new jobs vs. just 2.6 million expected in June.
- The June survey was carried out in the middle of the month and doesn’t cover the second wave of COVID-19 cases and subsequent economic fallout in late June.
Nonfarm payrolls added more jobs than expected last month as the US continued to reopen the economy by stages in various states. However, the reopening may have been premature, as warned by many health experts, and a surge of new cases has called for the suspension or cancellation of reopening efforts in areas around the country. The US is now reporting approximately 40,000 new cases per day, and remains the global epicentre for the pandemic.
Most of the growth was in the service industry, and in particular, the leisure and hospitality sector which rose by 2.1 million jobs. This accounts for 40% of all the jobs growth in June. Employment in food services and drinking places rose by 1.5 million after rising by the same amount in May. Employment in these establishments is still down 3.1 million compared to pre-pandemic figures. The amusements, gambling, and recreation sector added 353,000 jobs, and accommodation added 239,000.
— jeroen blokland (@jsblokland) June 5, 2020
Retail added 740,000 jobs in June after adding 372,000 in May and losing 2.4 million throughout March and April, with a total headcount 1.3 million jobs lower than in February. Health care rose by 358,000, although nursing care facilities lost 18,000 jobs. Social assistance added 117,000, and private education added 93,000. The “other services” sector rose by 357,000 jobs, most of which were in personal and laundry services which added 264,000 jobs. The other services sector is down 752,000 jobs compared to February figures.
Manufacturing added 356,000, down 757,000 compared to February. Most of the gains were in motor vehicles and parts which added 196,000 jobs. Durable goods manufacturing added 26,000 and machinery added 18,000. Professional and business services added 306,000 jobs, down 1.8 million from February. Temporary help services, services to buildings and dwellings, and accounting and bookkeeping services all saw gains. Computer systems design and related services lost 20,000 jobs.
Construction added 158,000 jobs in June and 453,000 in May, accounting for over half the jobs lost during the pandemic. Transportation and warehousing added 99,000 jobs. Wholesale trade employment rose by 68,000, and financial activities added 32,000 jobs. Government employment added 33,000 jobs. Mining lost 10,000 jobs.
The rate of unemployment may have been underestimated due to errors at the Bureau of Labor Statistics. For example, workers who have not lost their jobs but are currently out of work are still considered to be employed in the report, perhaps skewing the true figures significantly.
The BLS estimates a 1% margin for error due to this policy. An alternative measure that counts discouraged and underemployed workers showed the rate of unemployment falling from 21.2% to 18%.
Gold prices have ticked downward following the release of the June jobs report. Spot gold last traded at $1,766.89/oz, down -0.21% with a high of $1,774.42/oz and a low of $1,758.84/oz. Gold prices have corrected slightly following gains seen in yesterday’s session, but remain near an 8.5-year high seen mid-week. The rise of further coronavirus cases, along with some geopolitical tension between the US and Russia, is likely contributing to a bullish environment for gold.