The rebound in the U.S. labor market accelerated in June as the economy reopened more broadly, before a pickup in coronavirus cases that puts additional gains in jeopardy.
Payrolls rose by 4.8 million in June after an upwardly revised 2.7 million gain in the prior month, according to a Labor Department report Thursday. The unemployment rate fell for a second month, by 2.2 percentage points to 11.1%, still far above the pre-pandemic half-century low of 3.5%.
The June jobs report reflects a snapshot of mid-month conditions after a flurry of rehiring — particularly at restaurants and retailers — but before reopenings screeched to a halt amid rising virus cases around the country. That could slow or stall the rate of improvement in the labor market, with implications for President Donald Trump’s reelection chances, as well as for the extension of a U.S. stock-market rally following the best quarter since 1998.
U.S. stocks opened higher following the data. Treasuries and the dollar were lower.
A separate report from the Labor Department showed initial applications for unemployment insurance in regular state programs 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 programs — rose slightly to 19.3 million in the week ended June 20.
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%.
The Labor Department’s Bureau of Labor Statistics has largely fixed a problem that resulted in respondents being misclassified as employed when they should have been labeled as unemployed. Adjusted for the errors, the June unemployment rate would have been about 1 percentage point higher than reported — or 12.3%, compared with an adjusted 16.4% in May. “The degree of misclassification declined considerably in June,” BLS said.
A resurgence in virus cases has complicated the picture, leading states across the country to reverse or halt reopening efforts in hopes to slow the spread. That’s already led some rehired workers to get laid off once more. Paired with the coming expiration of the federal government’s extra $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 programs in four weeks.
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