The US economy created jobs at a record pace in June as firms took on more staff after the coronavirus downturn.
Payrolls surged 4.8 million, the most since the Labor Department began keeping records in 1939, helped by the reopening of factories and restaurants. It follows May’s jobs rebound, when 2.5 million joined the labour market, and comes after consumer spending data saw a jump in activity.
But a recent spike in Covid-19 cases has raised fears for continued growth. June’s rise is far higher than the three million jobs that many economists forecast would be created last month.
However, separate Labor Department data also showed that in the week ending 27 June, initial claims for unemployment fell only slightly, to 1.43 million, on the previous week.
Oxford Economics called it a “worryingly small decline”. Companies, including in populous states such as California, Florida and Texas, plan to scale back or delay reopening because of the fresh coronavirus outbreaks, which would hold back hiring.
This week, Federal Reserve chairman Jerome Powell acknowledged the rebound in activity, saying the economy had “entered an important new phase”. But he warned that continuing growth would depend on “our success in containing the virus”.
And despite two months in a row of jobs growth, employment is still about 15 million below its pre-pandemic level, with the jobless rate just above 11%.
‘Bumpier’ recovery
The US Labor Department said the leisure and hospitality sector added more than two million jobs, while retail added 740,000.
The resumption of routine medical appointments also helped, with healthcare employment rising 568,000. The reopening of factories meant manufacturing employment continued to rebound, rising by 356,000, driven mostly by a 195,000 gain in the car industry.
The surge in job creation in the past two months has been spurred by the government’s Paycheck Protection Program, which gives businesses loans that can be partially forgiven if used for wages. But those funds are drying up.
Michael Pearce, senior US economist at Capital Economics, said he expects “the recovery from here will be a lot bumpier and job gains far slower on average”.
According to a report by the Reuters news agency, analysts at investment Goldman Sachs have estimated that US states accounting for half the population have paused or partially reversed their reopening plans, with limits reimposed most often on bars, restaurants and the size of gatherings.
Moody’s Analytics economist Sophia Koropeckyj said the June jobs surge was “bittersweet”, as the rise in the number of cases was “diminishing the likelihood of a continued V-shaped recovery”.
She “expects that the rebound in employment will fizzle and payrolls will flatten out until a vaccine is widely available”.
Despite the caution, Wall Street share markets rose at the open, with the tech-heavy Nasdaq index jumping more than 1% to a record 10,268.7 points. US President Donald Trump called the job numbers “spectacular” and said they proved the economy was “roaring back”.
“These are historic numbers in a time when a lot of people would have wilted, but we didn’t wilt,” Mr Trump said. However, Mike Bell, global market strategist at JP Morgan Asset Management in London, said the resurgence of coronavirus cases in some cities meant it was “too soon to say for certain that this recovery in employment sounds the all-clear for investors”.
Source: bbc.com
