These 6 charts from the June jobs report show how much the economy has recovered — and how much further it has to go
Carmen Reinicke,Andy Kiersz
- The June jobs report released Thursday from the Bureau of Labor Statistics showed that the economy added 4.8 million payrolls during the month, and that the unemployment rate declined to 11.1%.
- It marks the second month in a row that the nonfarm payrolls report has exceeded expectations.
- Here are six charts that show how much the US labor market has rebounded so far in the pandemic recession recovery, and how much further there is to go before reaching pre-crisis levels.
The labor market recovery continued in June as states across the US reopened their economies following coronavirus-pandemic lockdowns earlier in the year.
The report released Thursday from the labor department showed that the economy added 4.8 million jobs during the month, and that the unemployment rate declined to 11.1% from 13.3% in May.
The June report also marks the second month in a row that nonfarm payrolls have exceeded economists' expectations, showing just how swiftly the US economy has recovered since starting the reopening process. Economists had expected 3 million jobs added, and the unemployment rate to decline to 12.5% in June.
In May, economists expecting a dismal report were shocked when the US added a revised 2.7 million jobs, and saw the unemployment rate declined to 13.3% from 14.7%.
"The bounce is impressive and welcome but there is a long road ahead to restore all the jobs that were lost in this recession," Bank of America economists led by Michelle Meyer wrote in a Thursday note.
President Donald Trump cheered the results in a Thursday press conference, saying "today's announcement proves that our economy is roaring back, it's coming back extremely strong," adding that there are some places where "we are putting out the flames."
US stocks went higher after the report, with all three major indexes posting gains.
While the report shows that the economic recovery from the pandemic recession progressed in June, there is still a long way to go before the labor market is at pre-crisis levels. Even though the US economy has added 7.5 million jobs in the last two months, it still has to add about 15 million more to break even from coronavirus pandemic losses.
And, there could be trouble ahead — the June report reflects only the first half of the month, before spiking coronavirus cases led more than 20 states and cities to either rollback or pause reopening plans.
"June is a tale of two cities," Becky Frankiewicz, ManpowerGroup North America president, told Business Insider.
"The first few weeks of June were strong, continuing a nice optimistic trend, and the last two weeks really slowed," she said, adding that the pullback was likely due to hiring slowing in states that rolled back or paused reopening efforts.
And, while jobs were added, elevated layoffs persist. In a report released simultaneously on Thursday, the Labor Department showed that 1.4 million Americans filed for unemployment insurance last week.
For the full impact of paused plans, re-instated restrictions, and continued layoffs, economists and industry watchers will have to wait for the July report, due in August.
Here are six charts from the June jobs report that show how much progress the US labor market has made so far, and how much further there is left to go before there's a full recovery.
1. The US economy added a record 4.8 million jobs in June, following a revised 2.7 million jobs added in May.
The second month of record job gains came mostly from payrolls added in leisure and hospitality, which gained 2.1 million jobs in June.
Employment also jumped by 740,00 in retail trade and 568,000 in education and health services during the month. Manufacturing, transportation, and construction all added jobs in June.
Still, it's important to remember that in all industries, employment remains far below pre-crisis levels. For example, while food services and drinking places (part of leisure and hospitality) added 1.5 million jobs in June after a similar addition in May, it remains 3.1 million payrolls below its February level.
2. The unemployment rate also ticked down slightly to 11.1% from 13.3% a month earlier.
In addition, the misclassification error, which had likely weighed down the unemployment rate in previous months, "declined considerably in June," the BLS wrote in the report.
The error was that a large number of people were being classified as employed but absent from work for "other reasons," when they should probably have been counted as unemployed on temporary layoff.
In June, if all workers had been counted correctly, the unemployment rate would have been one percentage point higher, but still down from the previous month.
3. A broader measure of unemployment, called the underemployment rate, or U-6, also declined in June.
The underemployment rate includes workers who say they want a job but haven't been actively looking for one, and people who are working part-time but want a full-time job.
In June, the U-6 rate declined to a seasonally adjusted 18% from from 21.7% in May. Still, its the third month in a row that the rate has remained elevated near 20%.
4. The labor force participation rate, or the share of Americans either working or looking for a job, increased for the second month in a row.
As people went back to work in June, the labor force participation rate ticked up. In addition, reentrants to the workforce, meaning people who previously worked but were not in the labor force prior to beginning a job search, increased by 711,000 to 2.4 million in June.
Still, labor force participation is much lower than it was pre-pandemic, as millions of Americans remain on the sidelines.
5. The employment-to-population ratio also increased as people went back to work.
The employment-to-population ratio, which measures the percentage of the population that is currently working, rose to 54.6% in June from 52.8% in May.
Still, the ratio remains well below its pre-pandemic level of 61.2% in February.
6. Although unemployment declined overall, the rate increased for Black men in June. Minority workers and women also continue to see joblessness at higher rates than whites and men.
While headline unemployment ticked down in June, minorities and women still have higher rates of joblessness than white workers and men.
In June, the unemployment rate fell to 10.2% for men and 11.2% for women. The white unemployment rate declined to 10.1%, the Black unemployment rate fell to 15.4%, and the Hispanic rate was 14.5%. The unemployment rate for Asians was 13.8%, little changed from May.
There was one outlier in the report — the unemployment rate for Black men increased to 16.3% in June, and is now at the pandemic-recession high.
While it's not immediately clear what led to the increase for Black men, it could be due to the "last hired, first fired" trend, Olugbenga Ajilore, senior economist at the Center for American Progress, told Business Insider.
He also noted the unemployment overall is highly elevated, and that the only group that doesn't have a double-digit unemployment rate is white men. "We shouldn't get used to double-digit unemployment rates," said Ajilore.
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