Economy adds jobs at record pace in June, bolstering hopes of rebound

Washington

THE rebound in the US labour market accelerated in June as the economy reopened more broadly, though filings for unemployment benefits remained elevated last week as novel coronavirus cases picked up.

Payrolls rose by 4.8 million in June after an upwardly revised 2.7 million gain in May, said a Labor Department report on Thursday. The unemployment rate fell for a second month, by 2.2 percentage points to 11.1 per cent, still far above the pre-pandemic half-century low of 3.5 per cent.

Wall Street's main indexes opened higher on Thursday with the Nasdaq hitting a record high, as data showed the economy added jobs at a record pace in June, bolstering hopes of a post-pandemic economic rebound. US President Donald Trump said the jobs report proves that the US economy is "roaring back".

The June jobs report, reflecting a snapshot of mid-month conditions, encapsulates a flurry of rehiring after states lifted stay-at-home orders and began reopening their economies. Adding to those gains in coming months may be critical to Mr Trump's re-election chances, as well as to the extension of a US stock-market rally following the best quarter since 1998.

A separate report from the Labor Department showed initial applications for unemployment insurance in regular state programmes fell by less than expected to 1.43 million in the week ended June 27. Continuing claims, or claims for ongoing unemployment benefits in state programmes, rose slightly to 19.3 million in the week ended June 20.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Economists had forecast payrolls to rise by 3.23 million - the median in a range of 500,000 to 9 million - and an unemployment rate of 12.5 per cent.

The Labor Department's Bureau of Labor Statistics said it largely fixed a problem from recent months when many respondents had been misclassified as employed when they should have been labelled as unemployed. Adjusted for the errors, the June unemployment rate would have been about 1 percentage point higher - or 12.3 per cent, compared with 16.4 per cent in May.

A resurgence in virus cases has complicated the picture, leading several states to reverse or halt reopening efforts in hopes of slowing the spread. That has already led some rehired workers to get laid off once more. Paired with the coming expiration of the federal government's extra US$600 in weekly unemployment benefits, the economy could take another hit in the months ahead.

In addition, the weekly figures show the number of Americans claiming jobless benefits remains extremely elevated, posting the first increase in state programmes in four weeks.

The increase in payrolls was led by leisure and hospitality and retail, illustrating the effect of the easing of business restrictions. Most sectors reported gains. Mining and logging, along with utilities, were the only major industries to cut jobs.

State government payrolls fell by another 25,000, as budget situations worsened amid falling tax revenues.

Unemployment among minorities and women remained worse than among white Americans and men. The black unemployment rate fell to 15.4 per cent from 16.8 per cent, while it declined to 10.1 per cent from 12.4 per cent among white Americans. Hispanic unemployment dropped to 14.5 per cent from 17.6 per cent. BLOOMBERG