Employment growth spiked in June as companies tried to keep up with a rapidly recovering US economy, the Department of Labor reported on Friday.
The non-farm workforce rose 850,000 for the month, compared to the Dow Jones estimate of 706,000 and better than May’s upwardly revised 583,000. However, the unemployment rate rose from 5.6% to 5.9% compared to expectations.
The rise in the unemployment rate occurred even though the activity rate was unchanged at 61.6%. A separate figure for discouraged workers and those who work part-time for economic reasons fell sharply to 9.8%, with the 0.4 percentage point decrease bringing the so-called real unemployment rate below 10% for the first time since March 2020.
The markets got on the news, with futures on major indices showing modest gains when opened before the holiday weekend.
“This was a consistently positive job report from a market perspective,” said Seema Shah, chief strategist at Principal Global Investors. “The improvement today likely reflects a slight relaxation in the labor supply constraints that have held back the labor market in recent months, as well as the continued momentum of economic reopening.”
Employee hiring accelerated as the second quarter turned into a summer drawing closer to normal for Americans held captive due to pandemic restrictions last year.
As the data continues to point upwards, economists expect GDP growth of nearly 10% in the second quarter, a staggering continuation of a rebound supported by vaccines that have sharply reduced Covid-19 case rates, as well as hospital admissions and deaths.
The latest numbers bring the overall rebound in jobs after the pandemic’s losses to 15.6 million. More than 22.3 million Americans were laid off due to government business restrictions in March and April 2020, and the total employment rate remains 7.13 million below February 2020.
Hospitality continued to be the main beneficiary of the reopening as workers returned to their jobs in bars, restaurants, hotels and the like.
The industry grew 343,000 as restrictions eased across the country. That total included 194,000 in bars and restaurants but still left the sector 2.2 million fewer than in February 2020 before the pandemic started. Despite the strong growth in employment, the sector’s unemployment rate rose to 10.9%.
Other notable gains were in the education sector, which rose to 269,000 in government, local and private recruitments, while professional and business services grew by 72,000 and retail by 67,000.
Other service industries created 56,000 jobs, including an increase of 29,000 in personnel and laundry services, a subsector that was seen as a proxy for resumption of normal business. Social welfare added 32,000, wholesaling added 21,000, and mining grew 10,000.
The manufacturing sector rose by 15,000 in the course of the month, although the construction sector lost 7,000 jobs, although the housing industry is boiling, in which new construction was slowed down by supply bottlenecks and the sharp rise in wood prices before the recent slump.
Amid the rise in total employment, wage increases also accelerated.
Average hourly wages rose 0.33% month-over-month and 3.6% year-over-year, both in line with Dow Jones estimates.
Aggregate wage growth had been skewed by much of the pandemic as low-income workers in high-contact industries like hospitality stayed by the side. With the June profit, the labor market surpasses its previous pace; Average hourly wages rose 3% year over year in February 2020, at a time when low-income earners were finally seeing gains after a generation of stagnant paychecks.
Revisions made in the previous months pushed the number of jobs up a little – May rose by 24,000 to 583,000, which was softened by a reduction from 9,000 in April to 269,000.
The average weekly working time fell by 0.1 hours to 34.7 hours.
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